Employment Soft–But It Has to Be

Job growth was soft this month:

Don’t be too alarmed, however,  August’s number was a bit stronger than normal.  Taking the last three months together, employment is growing at an annual rate of 1.1 percent, which is about in line with labor force growth.  In many parts of the country, employers are having a hard time finding good workers.  (The industrial Midwest seems to be the primary exception.)  With the unemployment rate down to 4.6 percent, it’s not surprising that job growth is down close to labor force growth.  We simply don’t have the people to hire (in the right place, with the right skills) until the labor force grows a bit more.

However, the September number needs to be averaged with July and August to look OK.  Taken by itself, job growth was overly weak.  So how do we interpret the low September growth?  As a blip to be averaged with stronger months, or as the beginning of the new trend to sub-par growth and rising unemployment?  The pessimists have made a case for a pronounced slowdown, and this could be the first sign of it, but my estimate is that job growth will rebound in October to a moderate level.

Business Strategy Implications: Job markets are still tight, so keep working on employee retention.  I have resources to help you find help on the Conerly Consulting web site.  Don’t plan on the economy falling apart, but keep up the contingency planning.