Unemployment Rate Falls to Lowest Level In Nine Years

December 5, 2016 – Employers added a solid 178,000 jobs last month as the U.S. unemployment rate fell slightly to 4.6 percent, according to the most recent U.S. Bureau of Labor Statistics report. This is the unemployment rate’s lowest standing in nine years. The number of workers unemployed also dropped to 7.4 million.

The latest report follows the addition of 161,000 jobs added in October. Thus far in 2016, employment growth has averaged 181,000 per month, compared with an average monthly increase of 229,000 in 2015.

“It looks like companies are pretty bullish about what they’re going to see in 2017 and are continuing their strong hiring of the past few years,” said Steve Rick, chief economist at insurance company CUNA Mutual Group. “This is a good tailwind for the new administration.”

“What this jobs report shows is how Obama’s legacy will be remembered, and what Trump’s baseline is for his own economic policies,” said Indeed.com chief economist Jed Kolko. “Trump is inheriting an economy with low unemployment and strong wage gains.”

Where Job Growth Occurred

• Employment in professional and business services rose by 63,000 in November and has risen by 571,000 over the year. Over the month, accounting and bookkeeping services added 18,000 jobs. Employment continued to trend up in administrative and support services (+36,000), computer systems design and related services (+5,000), and management and technical consulting services (+4,000).

• Healthcare employment rose by 28,000 in November. Within the industry, employment growth occurred in ambulatory healthcare services (+22,000). Over the past 12 months, healthcare has added 407,000 jobs.

• Employment in construction continued on its recent upward trend in November (+19,000), with a gain in residential specialty trade contractors (+15,000). Over the past three months, construction has added 59,000 jobs, largely in residential construction.

• Employment in other major industries, including mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government, changed little over the month.

Hiring to Increase 

With this latest positive jobs report, employers might feel more confident to increase their hiring efforts in the coming year. Thirty four percent of employers say they plan to add full-time, permanent employees in upcoming months, on par with last year, according to CareerBuilder’s ‘U.S. Job Forecast.’ Nine percent expect to reduce staff, similar to 10 percent last year, while 53 percent anticipate no change and four percent are unsure.

“Employers are optimistic, though hesitant, with their hiring intentions but we’re pleased to see levels we were seeing before the recession,” said Kip Wright, senior vice president of Manpower North America. “While employers are looking to grow their workforces, many are challenged to find candidates with the right skills. As the hiring outlook continues to improve, attracting and retaining skilled talent will become even more difficult.

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Cautious Hiring

In truth, hiring managers in the U.S. might be prepared to hire more professionals in the year ahead, however they are likely to be more cautious with their hiring plans than in the past two years, according to the semi-annual hiring survey by DHI Group. More than half (56 percent) of hiring mangers anticipate increased hiring levels in the first half of 2017. But this is a six point drop from when this group was last surveyed in June and a five point drop from a year ago.

A New Landscape

With the U.S. economy nearing full employment capacity, companies are facing a confluence of staffing and talent management issues that reflect the changing nature of the labor market. Seventy six percent of HR professionals, according to a new study by the ADP Research Institute and The Economist Intelligence Unit (EIU), expect the market for skilled workers will continue to tighten and 75 percent anticipate turnover in the next three years. This new landscape stands to drive competition for talent. For executive recruiters, this likely signals more business ahead in 2017.

Inadequate Talent Supply

Numerous reports continue to come out citing that lack of quality talent is an issue among companies despite a large amount of people seeking new employment opportunities.

The inadequate supply of qualified and skilled talent is the second-biggest threat to U.S. companies’ ability to meet revenue or business performance targets, second only to “increased competitive pressures,” concluded a recent Randstad ‘U.S. Workplace Trends’ report. Nearly eight-in-10 hiring decision makers (79 percent) agree that when positions become available at their organization, they struggle to find people whose skills match the job requirements.

“Often the challenge for hiring executives isn’t the quantity of available candidates, instead it’s the increasing difficulty in finding talent that is qualified, with the right skills and cultural fit for the position,” said Jim Link, chief human resources officer (CHRO) of Randstad North America.

People are the key factor linking innovation, competitiveness and growth for companies today, he said. “But securing skilled workers is getting more complex and challenging than ever before.” As organizations further increase their hiring activity, he added, low unemployment means business leaders will have to work harder at hiring and keeping quality talent particularly as employees gain more options and confidence to change employers.

Ninety five percent of recruiters expect finding new talent to be as or more challenging in 2017 as this year, according to the latest ‘Recruiter Nation Survey’ conducted by Jobvite. Corporate recruiters cited a lack of skilled candidates (65 percent) and dealing with hiring managers moving candidates through the hiring process (48 percent) as their biggest challenges. Recruiters expect competition for talent to be in the most demand within hospitality (87 percent), manufacturing (79 percent) and healthcare (78 percent).

To keep up, the Jobvite report found that in-house recruiters are offering both traditional and non-traditional incentives to lure candidates, like raising salary offers (68 percent), awarding monetary bonuses to incentivize referrals (64 percent), allowing for flexible work hours (44 percent), and implementing a casual dress code (44 percent).

Job creation has been “steadily increasing” ever since the recession, “forcing corporate recruiters to double up their efforts to fill positions with quality candidates,” said Dan Finnigan, chief executive officer of Jobvite. “But there simply aren’t enough educated, talented and qualified candidates to keep up with the demand.” As a result, he says, “these recruiters must now go above and beyond by helping to create compelling employer brands and an exceptional candidate experience to keep their clients happy.”

Finding the Right Skill Sets 

According to a recent Right Management report, companies are struggling to find people with the precise skills or combination of skills they need. Over one third of employers worldwide said they were having trouble filling positions due to lack of suitable talent.

As the global demand for highly skilled labor continues to grow, the Right Management report suggests that leaders will need to align their talent strategies with their business strategies to ensure that they have the right people in place, and rethink old assumptions about work models, people practices and talent sources.

“As the struggle to find the right talent continues, and candidates with in-demand skills get the upper hand, employers will be under pressure to position themselves as ‘talent destinations’ to attract the best workers that will drive their business forward,” noted Mr. Wright.

Competition is indeed fierce for skilled talent. “That means it’s more important than ever that companies resolve to invest in the recruitment and development of top talent and explore creative, progressive staffing solutions,” said Joyce Russell, Adecco Staffing USA president.

Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media