Labor Market Review: How Did the Economy Perform in 2015?

Indeed Chief Economist Tara Sinclair shares her perspective on the labor market in 2016.

The Bureau of Labor Statistics will release a new jobs report this Friday—the last report covering 2015 data and the final statement on how the labor market fared over the last year. Ahead of the government report, here’s my take on where things stand:

2015 was all about adding jobs.

While 2014 was a mixed bag (we didn’t recover all the positions lost in recession until the second half of the year), 2015 was positive all around—the economy registered new employment records every month. Today, there are more jobs in the US than there have ever been before.

Through November, employment growth averaged 210,000 jobs per month, the second strongest figure since the recession. It’s been 5½ years since the financial meltdown, so we’ve been waiting for this kind of growth for quite some time.

But there are still a few indicators we’re watching to ensure this growth trend continues.

One significant indicator is wages. We haven’t seen those rise in step with job openings. Seeing increases in salaries in the Friday report would be a sign of broader economic strength, and would be a promising sign for job seekers.

Another indicator of economic strength is labor force participation, which has been stubbornly low for the last several years. Some of that is due to demographics such as the retiring baby boomers, but there are still many prime working-age people who have given up on the labor market. Seeing them step back into the workforce would suggest that employers are offering more attractive positions than in recent years.

What can we expect in 2016?

Since the Fed raised interest rates in December, we’ve been watching construction and manufacturing closely to track hiring trends. Those industries are heavily dependent on credit and are sensitive to interest rate changes as a result. If they continue to show strong job growth in the coming months we’ll know the interest rate hike hasn’t been too disruptive. In general, if hiring keeps increasing across the labor market, it will be a clear sign that interest rate increases haven’t stemmed growth.

As the Indeed industry trend index indicates, we closed 2015 on a positive note in all industries, meaning there’s work for candidates all kinds. Taken all together, there’s ample cause for employers and job seekers to feel optimistic about their prospects in the coming year.

Indeed’s Industry Trends Index saw job gains across the board in 2015, with the strongest numbers toward the end of the year.