U.S. private employers continued to add jobs in September, with an additional 156,000 nonfarm jobs according to the Bureau of Labor Statistics and 151,000 private sector jobs according to the ADP National Employment Report. Professional and business services, which includes accounting and finance roles, was far and away the fastest growing sector of the employment market.
72 Consecutive Months of Job Creation
Although it was less than the 170,000 jobs expected by economists, September’s report marks the 72nd consecutive month – or six full years – of job creation. Job growth averaged 192,000 over the third quarter, which closely mirrored the first quarter’s pace and was up from the 146,000 average in the second quarter. Sustaining this level of growth will deliver enough jobs to keep up with the growing population.
The Conference Board Employment Trends Index also increased in September, suggesting moderate job growth through the first quarter of 2017. “Despite the recent decline in corporate profits, employers are not showing any signs of reducing payrolls,” said Gad Levanon, the Conference Board’s Chief Economist for North America.
Moreover, jobless claims fell to the second lowest level since 1970, just above the four-decade low in April. This marks 83 straight weeks that the filings have been below 300,000, which is not only the longest streak since 1970, but an indication of a healthy labor market.
The War For Talent
While job gains have slowed from 2015, they were robust enough to entice many Americans to look for work when they had previously been discouraged to do so. The labor force has increased by 3 million workers over the past year and nationwide unemployment has remained at or just below 5% – an eight-year low. More importantly, unemployment in Los Angeles is 4.6% and 2.5% among those with a Bachelor’s degree or higher.
The labor-force participation rate came in at 62.9% – mostly due to the retirement of many baby boomers – but more workers are rejoining the labor market, and the number of temporary employees has increased by more than 65% since the end of 2009 according to the Bureau of Labor Statistics.
September was no different, with temporary and contract employment expanded by an additional 23,200 jobs, taking the Temporary Penetration Rate to near all-time highs. A recent workplace survey by the Addison Group revealed that 94% of hiring managers were more willing to hire contract workers today than they were five years ago – 88% for senior-level roles – and 46% have used contract workers to fill their project and staffing needs in the past year. The survey also showed that these on-demand opportunities will continue, especially as the competition for skilled workers increases as the labor market continues to tighten.
Employment and Compensation are Driving the Economy
Companies facing increased pressure to fill positions faster as they compete for skilled accounting and finance professionals has had a positive effect on wage growth. For the general population, wage growth was previously stuck at around 2% and increased to 2.6% over the last year, outpacing inflation.
That said, the unemployment rate for accounting and finance professionals is half of the national and regional unemployment rates, and the increases in compensation have been more dramatic, with research from the Association for Finance Professionals reporting average salary increases of 4.6% in the past year. Dallas-based compensation consultant Dindy Robinson noted that top performers are seeing salary increases of up to 10%.
The good news is that the healthy job market has improved consumer spending and is driving economic growth amidst low productivity. Deutsche Bank’s Chief US Economist Joseph La Vorgna told Business Insider that “GDP growth in the ongoing cycle has been entirely supported by labor market gains.”