November’s payroll figures were again above consensus forecasts, with total nonfarm payrolls rising by 211,000 and upward revisions to the figures from September and October adding a net +35,000. While employment in financial activities rose by 14,000, total office-using employment was negatively affected by a -12,000 contraction in information jobs, with employment in “motion pictures and sound recording” retreating by -13,000. Somewhat disappointing was the 29,000 increase in office-using employment as a whole, led by a less-than-stellar 27,000 gain in professional and business services—which marked the weakest increase since January 2014 (Table 1 and Chart 1 on the following page). A pullback in temporary help services was largely to blame, as a -12,300 contraction in the category reversed some of October’s +28,100 increase. Note that the temporary help services sector has been especially volatile; over the past 12 months, average monthly job gains from this sector have totaled just above 6,000, but the standard deviation of these changes has been more than twice as great (13,500).
Despite the retrenchment in office-using employment, there is little evidence of an overall slowdown in the labor market, and no sign of a pullback in wages. Average hourly earnings rose by 2.3%—the 11th consecutive month of wage gains at or above 2%—and weakness at the end of last year means that even if there is no change in average hourly earnings in December, the year-on-year gain will rise to 2.6%--the largest increase since 2009. As shown in Chart 2 on the following page, most sectors of employment have seen above-average wage growth. Of the four major sectors that have experienced below-average wage growth, two of the four (administration/waste services and transportation/warehousing) are in areas with below-average wages; all things being equal, wage growth in higher-paying jobs will boost average wages by more than the same percentage increase in lower-paying jobs. Inflation may not necessarily be on the horizon, but at least for now, wages are likely to continue growing through early 2016.
Table 1. Monthly Change in Office-Using Payrolls by Category (000s, SA)
Chart 1. Office-Using Employment and Total Payrolls, November 2007 – November 2015 (Seasonally-Adjusted, 000s)
Chart 2. Average Hourly Earnings Growth vs. Job Growth, By Sector