U.S. Employment Report Keeps on Keeping On

Watching the job market of late has been a lot like watching paint dry: There's not really much to see and it just sort of creeps along. As I've mentioned in other recent blogs following the monthly report from the U.S. Bureau of Labor Statistics around the first Friday of each month, it looks increasingly like we've lapsed back into what I like to call "slow growth mode."

Once again, new jobs created are around 150,000 for September 2016; 156,000 to be more precise. There was little growth outside these four industry sectors: Professional and business services (+67,000 for September), health care (+33,000), food services and drinking places (+30,000) and retail trade employment (+22,000).

Together those four accounted for 152,000 of the 156,000 jobs added for the month!

Looking at Some Growth Trends

There are two interesting but somewhat contradictory long term trends emerging from the numbers. First, as the average hourly earnings chart shows, wage growth has largely trended upward since 2012.

It's been in a narrow band, however, that stretches from just over 1.5 percent (October 2012) to no more than 2.68 percent (July 2016). This is the kind of trend that the Fed likes to see, because it shows an improving earnings picture for workers in general, and provides some rationale for raising interest rates to keep inflation from kicking in.

But there's another growth trend that's going in the other direction — namely, the rate of monthly job creation. Average monthly job growth for 2016 so far has been about 178,000. That's down from the average of 228,000 in 2015, which was down from the average of 251,000 in 2015.

This is a somewhat wider band of numbers than wage growth, with a minimum of 24,000 jobs (May 2016) and a maximum of 271,000 jobs (June 2016) created for this year alone. There's also an absolute minimum of -823,000 jobs lost (March 2009) and absolute maximum of 346,000 jobs created (April 2011) over the period from 2007 to the present month.

That net change graph is strangely flat, but with plenty of big valleys and small peaks. Since 2011, that range has been much narrower, with peaks around 300,000 and the floor set this year at 24,000.

What I find troubling about this second trend is that average monthly growth for individual years continues to decline since 2014, in much the same way it improved from 2011 through 2014. The inescapable conclusion is that while jobs and wages do continue to grow, their growth is not only painfully slow but for job growth at least, the overall rate of growth is decelerating.

That's not the kind of picture that leads to a rosy, optimistic outlook about the future. We've been clawing our way out of the trench we hit in 2009 for a long time now, but we're still not far enough away from that nadir to forget about it, or to be able to concentrate on the pleasant heights that might possibly lie ahead.

Slow growth mode continues, and there seems little likelihood of relief ahead.