Last month’s job gains disappointed, with the US economy creating only 142,000 jobs in September and average monthly job growth for the year to date sitting at 198,000, down from 260,000 in 2014.
Early forecasts are slightly above last month, which would be great numbers if we were at the labor force participation rate seen before the Great Recession. Unfortunately, our labor force participation rate hit a new low last month of just 62.4%, a rate we last saw in the late 1970s. What’s also troubling is that in the third quarter companies have been announcing job cuts, including a range of industries from banks to telecoms, as well as continued cuts in energy.
For months, we have been seeing strong demand from employers for workers, which left opportunity for wage increases and other moves by employers to draw workers off the sidelines. Friday’s numbers will provide another data point to see if there’s positive movement in this direction or more of the same relative stagnancy. Announcements of company cutbacks and relatively low GDP growth would suggest the latter, which makes us wonder if the window to get back to stronger GDP growth in 2016 is starting to close.
In 2014, we saw strong demand from employers being met by employment growth. In other words, employers had job openings and were able to fill them. But this year, while demand has continued growing apace, job seekers seem more aloof—candidates have many options, and in some sectors, employers aren’t able to attract people to the opportunities they’re offering.
Retail is a case in point. As the chart above shows, job seeker interest in the retail sector is waning even as demand increases for the holiday season. We’ve seen a similar trend in the restaurant industry.
The economy at large is experiencing stagnant wage growth, which may be preventing employers in these talent-short sectors from using salary as an incentive (though some have raised wages recently). Instead, there has been a focus on shift scheduling and setting standards around when workers work and how much notice they are given of that schedule. These moves give workers more of a say, and can be key attractors for new talent.
If employers can find ways to lure job seekers, we could still have a chance to see a robust 2016 job market. But if October’s numbers continue to disappoint, as many expect, the window of opening will get a bit slimmer.