Sunday, November 8, 2015

Strong October US jobs, Wis's lagging should be part of debate

Friday featured a surprisingly strong US jobs report, with a seasonally-adjusted 271,000 jobs added (268,000 in the private sector), and a slight drop in the unemployment rate to 5.0% despite an increase in the labor force (actually 5.05% to 5.03%). This was a relief after the last two months had combined for a total of 290,000 jobs (273,000 private sector), and October's numbers jumped over Wall Street's expectations of that lowered amount of job growth to continue.

The strongest sectors continue to be in various service industries, as the report from the Bureau of Labor Statistics notes
Employment in professional and business services increased by 78,000 in October, compared with an average gain of 52,000 per month over the prior 12 months. In October, job gains occurred in administrative and support services (+46,000), computer systems design and related services (+10,000), and architectural and engineering services (+8,000).

Health care added 45,000 jobs in October. Within the industry, employment growth continued in ambulatory health care services (+27,000) and in hospitals (+18,000). Over the past year, health care has added 495,000 jobs.

Employment in retail trade rose by 44,000 in October, compared with an average monthly gain of 25,000 over the prior 12 months. In October, job gains occurred in clothing and accessories stores (+20,000), general merchandise stores (+11,000), and automobile dealers (+6,000).
But there was also one other standout in October's report- construction work, which was up by 31,000 jobs for October. Interestingly, the vast majority of this was in the "nonresidential specialty trade contractor" area (+21,100), an area that barely counts for 1/3 of total construction jobs. Construction wages also jumped in October, with average weekly wages up more than $50 compared to September, an increase of nearly 5.2%. Maybe a lot of that is a one-time blip, but it sure indicates that employers are starting to pay more for those jobs nationwide, and maybe the WMC mentality of "suppress wages as much as you can" isn't one that's going to work in that field for the near future.

One sector that continued to struggle despite the great jobs numbers in October was manufacturing, which didn't add any of those 268,000 private sector jobs last month, and has lost a total of 27,000 jobs since July. And last week's news of Kraft Heinz closing 7 factories (including the Oscar Mayer plant in Madison) along with the continuance of an anti-export strong dollar won't help manufacturing grow jobs for the near future, so that's a dark cloud that needs to be looked at to see if it spreads further as the weather cools.

But manufacturing and the continued weakness in mining (due to low oil prices) were the only dark sides in this reports, which sets up an interesting contrast for Tuesday's GOP debate in Milwaukee. Will the Republican presidential candidates be asked this simple question.

"Here in Wisconsin, Scott Walker has put in a lot of the policies you espouse: lowering corporate and income taxes, cutting worker rights, deregulating numerous industries and limiting liability for lawsuits. By doing so he promised 250,000 jobs would be created in the first four years of his time in office. And nearly 5 years later, we know that if Wisconsin had merely kept up with the rate of job growth, they would have nearly 260,000 jobs."

"Instead, Wisconsin hasn't even added 160,000 jobs since Walker and Republicans have been in office. With that in mind, how would turning the nation's policies into something that resembles Wisconsin's policies be an improvement for the rest of the country? And why should Americans believe the current recovery won't be slowed down if you get into office?"

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