Why American jobs could bounce back
October wasn’t a great month for American jobs. But a large General Motors strike has ended, and the US labor market is expected to have found its footing again.
Well, a little bit, anyway. Economists surveyed by Refinitiv expect the US economy added 180,000 jobs in November. That’s up from 128,000 in the prior month, during which 46,000 workers walked out of their General Motors jobs for a 40-day strike.
Although 180,000 jobs would be an improvement, the pace of hiring has slowed in 2019 compared to last year.
Also, recent economic data has come in weaker than expected, casting a long shadow on the American economy. The Institute for Supply Management’s manufacturing and non-manufacturing surveys, as well as private sector payrolls were below expectations this week. Those indicators prompted some economists to downgrade their forecasts for Friday’s report.
The Bureau of Labor Statistics will release its November jobs report at 8:30 am ET Friday. The unemployment rate is expected to remain unchanged at 3.6%, while paychecks are forecast to have grown 3% from a year earlier.
“There are signs that growth is slowing, most obviously in manufacturing but also in services,” James McCann, senior global economist at Aberdeen Standard Investments, told CNN Business.
The manufacturing sector recorded its fourth-consecutive contraction in November.
“But the key to all this is that the labor market has remained healthy,” McCann added.
It’s true. October didn’t turn out a big number, but it was far from the disaster many economists had predicted. Despite the loss of 36,000 manufacturing jobs, most of them from GM’s strike, the rest of October’s report was pretty solid.
All in all, America’s labor market is still in rather good shape, with unemployment near a 50-year low. Most people who want a job, have a job, and nonfarm payrolls have increased steadily in 2019.
But hiring could slow down as it becomes more challenging for businesses to find workers. At the same time, this dynamic could help wages increase. The tight job market is also allowing consumers to spend, which is good for the US economy that relies heavily on consumption.
“We expect that the jobs report will continue to show no sign of a recession. Recession fears have always been overblown and even 110 months into the recovery, the labor market still has room to improve,” said Upwork Chief Economist Adam Ozimek.
Last week, US gross domestic product growth for the third quarter was revised up to a 2.1% annual rate, from 1.9% at the initial reading, offering some more reason to be optimistic about the economy.
But even without a recession on the horizon, the economy seems to be gradually slowing down. The New York Federal Reserve is forecasting just economic growth at a 0.8% annual rate between October and December. The Atlanta Fed downgraded its fourth-quarter growth expectation to a 1.3% rate from 1.7% at the start of the week.
If the pace of hiring suddenly dropped off, or if initial jobless claims spiked from one day to the next, it would be a very bad sign for the economy, said McCann. But for November, that isn’t expected.