What to Watch in Friday’s Jobs Report
Following a dismal September jobs report — with just 18,000 new jobs created, the weakest in seven years — the labor market roared back life in October, adding 261,000 new jobs and pushing the nation’s unemployment rate to a 17-year low.
What’s next for Friday’s November jobs report? Here’s what we’re watching for:
- +171,000 new jobs added to nonfarm payrolls in November;
- Unemployment rate down to 4.0 percent;
- Average hourly earnings up 2.4 percent from one year ago;
- Labor force participation rate down slightly to 62.6 percent.
Back on Track
This year, the economy has added an average of 169,000 new jobs per month. That’s sharply down from the 250,000 jobs per month pace of 2014. But it’s still more than enough to keep the economy near full employment.
Economists estimate only about 110,000 new jobs are needed each month to fully employ all of the new workers joining the labor force. Anything beyond that puts further downward pressure on unemployment, tightening today’s already historically robust labor market.
With the volatility of hurricane season behind us, most economists expect a return to slow and steady job growth in November. Based on the steady pace of hiring we see in Glassdoor job postings data, we’re expecting to see +171,000 new jobs added to payrolls in November, roughly in line with the average pace during the first 10 months of the year.
A Mixed Wage Picture
Although the labor market has heated up in 2017, average pay for most American workers has not. Last month, the BLS reported that average hourly earnings rose just 2.4 percent from a year ago — well below the roughly 3-4 percent pace we’d expect today.
A back-of-the-envelope estimate for what we should expect for wage growth is the pace of labor productivity — how much value workers produce per hour on average — plus inflation. Over the last year, labor productivity is up about 1.5 percent, and inflation is up about 2 percent. By that measure, average pay for U.S. workers should be rising at about 3.5 percent annually — well above today’s pace.
The wage picture looks even less rosy in Glassdoor salary data. According to the Glassdoor Local Pay Reports, U.S. median base pay for full-time workers was up just 1.2 percent from a year ago in November. However, beneath that average pay growth, the wage picture today is very diverse.
In tech hubs like San Francisco, Seattle, and Los Angeles wages are rising well above the national average. But in energy-rich Houston, average pay is barely rising at all. For in-demand tech jobs like software engineer, healthcare jobs like licensed practical nurse, and e-commerce jobs like warehouse associate pay is rising at a healthy pace today. But some jobs like maintenance worker, quality engineer, and marketing manager are seeing wages stagnate or decline according to salary data on Glassdoor.
Based on the anemic pay growth we’re seeing on Glassdoor, we expect another month of slow wage growth from BLS on Friday, with average hourly earnings up about 2.4 percent from a year ago.
Despite two major hurricanes and political turmoil in Washington, D.C. the U.S. economy has forged ahead this year, adding 1.69 million new jobs as of October and pushing stock markets to an all-time record high.
However, with rising Federal Reserve interest rates and slowing job growth, some economists are beginning to wonder whether the economy is nearing an end to its eight-year expansion. After all, October marks 85 consecutive months of positive job gains, an all-time record since the 1930s — a historic streak of good fortune that cannot last indefinitely.
With unemployment at a 17-year low, these are good times for job seekers. For that reason, now’s an ideal time to plan ahead for what promises to be an eventual economic slowdown — shoring up savings, reining in consumer debt, and polishing up resumes for when it’s time for workers to move on to the next stage of their careers.
To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.