By Steven R. Drexel, President and CEO of Cornerstone Staffing Solutions, Inc.

On Friday October 7th, the Bureau of Labor Statistics (“BLS”) released its monthly summary of labor market activity covering September 2016. The consensus expectation called for job growth to improve modestly from August’s mildly disappointing increase which was originally reported as 151,000 net new jobs. The consensus expectation for September’s job growth was 170,000 positions. The official report indicated that September’s growth was softer, with a pickup of 156,000 net new jobs. The unemployment rate increased by a tenth to 5.0 percent. The broadest measure of unemployment that includes those marginally attached and working part time for economic reasons was unchanged at 9.7 percent. Average hourly earnings improved slightly to indicate a 2.6 percent improvement over the prior year. Further, the average workweek was unchanged sequentially at 34.4 hours. The business sector details indicated that a slightly smaller majority of the industries grew during September as 57.8 percent were up or steady compared to 61.5 two months ago during July. Construction, retail trade, professional and business services as well as education and health services were solid during September. Manufacturing, transportation and warehousing as well as government employment all contracted during September. Notably, mining and manufacturing employment was unchanged this month, which broke a 23 month slide. The labor force participation rate edged up to 62.9 percent during September as a net 444,000 people entered the labor force bringing the cumulative 12 month gain to an encouraging 3,000,000 heads.

Overall, the jobs increase during September was once again, mildly soft — but at the low end of acceptable. The increase in the unemployment rate was technical in nature, and not a sign of weakness. The improving labor force participation rate suggests that the public has an improved degree of optimism drawing more people into the labor pool. The metrics suggest continuing improvement — but at a very measured, gradual, even slowing pace. Consumers have been the most important driver of growth in the broader economy. Fortunately, consumer confidence is solid and recently improving.

On balance, this was not a great report, but it included enough indications of improvement to point to a healthy and still expanding job market that remains consistent with a long but slow economic expansion

Word on the Street

In the real world of staffing and employment services, there is a sense that the market is improving as we move into the seasonally important fall segment of the year. It is evident that 2016 is growing at a slower pace than the prior two years, but relief in that the cyclical pause is not suppressing the seasonal increase. There are no signs of an increase in layoffs, this year. However, orders are harder to fill in part because the labor market continues to tighten, particularly for higher skilled workers, but there is also a sense employers are more selective with candidates, and more cautious about hiring generally. The tighter labor market is evident in increasing wage pressure.

The Outlook

Employment growth as well as broader economic growth will continue consistent with an aging expansion and tightening labor market. The domestic economy, as measured by GDP, will accelerate during the remaining months of 2016 as some of the headwinds subside and corporate profits begin to recover. Employment growth on the other hand will average less than 200,000 positions for the balance of 2016 as the labor market continues to tighten. Don’t expect jobs to grow as fast as they did during earlier parts of the expansion. However, even slower job growth will be sufficient, to support a growing labor force, a low unemployment rate and, increasing average hourly earnings. The expansion will continue at a slow pace. We should acknowledge that in exchange for slower growth, we are getting a longer expansion.

Please feel free to contact me if you have any questions or comments.

More about Cornerstone Staffing Solutions
Cornerstone Staffing Solutions is among the top 134 largest staffing firms in America, as ranked by Staffing Industry Analysts. Since 2003, Cornerstone has grown from a neighborhood staffing provider to a $100 million national firm that employs thousands of people at hundreds of companies from California to Maryland. Providing candidate searching and job placement for administrative, industrial, technical, sales and transportation positions, Cornerstone truly is where talent and jobs meet. Visit us at: www.cornerstone-staffing.com.