Unemployment Rate Falls to 17 Year Low

The hurricane-impacted job market bounced back in October as the unemployment rate fell to its lowest level since the Clinton administration. Let’s go inside the latest jobs report.

November 6, 2017 – Employers added 261,000 jobs last month as the U.S. unemployment rate dropped to 4.1 percent, the lowest in nearly 17 years, according to the most recent U.S. Bureau of Labor Statistics report. Economists had forecast that payrolls would increase by 310,000 jobs last month.

During October, the number of workers unemployed declined by 281,000 to 6.5 million. Since January, the unemployment rate has declined by 0.7 percentage point, and the number of unemployed persons has decreased by 1.1 million.

Employment in food services and drinking establishments increased sharply over the month, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey. In October, employment also increased in professional and business services, manufacturing and healthcare.

“Hurricane job loss in a given month is typically followed by a bounce-back over the following three monthly payroll reports,” said John Herrmann, a rates strategist at MUFG Securities. That means the distortions may continue through the end of this year.

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Brett Ryan, an economist at Deutsche Bank, told The New York Times that there was a soundness to the numbers that had been lacking. “It’s finally feeling like the economy is starting to fire on multiple cylinders rather than relying solely on consumers,” he said.

Where Job Growth Occurred

During the month, job growth took hold in a number of broad industries. Here’s a look at some of the most important key sectors:

  • Employment in food services and drinking places rose sharply in October (by 89,000), following a decrease of 98,000 in September when many workers were off payrolls due to the hurricanes.
  • Professional and business services added 50,000 jobs in October, about in line with its average monthly gain over the prior 12 months.
  • Manufacturing employment rose by 24,000 in October, with job gains in computer and electronic products (5,000) and chemicals (4,000). Employment in fabricated metals continued to trend up (by 4,000). Manufacturing has added 156,000 jobs since a recent employment low in November 2016.
  • Healthcare added 22,000 jobs in October. Employment in ambulatory healthcare services continued to trend up over the month (by 16,000). Healthcare has added an average of 24,000 jobs per month thus far in 2017, compared with an average gain of 32,000 per month in 2016.
  • Employment in other major industries, including mining, construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, changed little in October.

Wage Growth Seen in Most Recent Quarter
Overall wage growth increased by 1.7 percent year-over-year across all industries in the third quarter, according to the latest ADP Workforce Vitality Report. The report tracks the same set of workers over time, which provides a more insightful picture of wage growth than overall wage growth.

What Sectors Are Hiring

U.S. employers in all sectors expected hiring to pick up in the final quarter of 2017, with 21 percent planning to add staff between now and December.

According to the latest “Employment Outlook Survey,” released by ManpowerGroup, employers in all 13 national industry sectors expected to grow staffing levels during the final quarter of 2017: leisure & hospitality (28 percent), professional & business services (22 percent), wholesale & retail trade (20 percent), durable goods manufacturing (18 percent), transportation & utilities (18 percent), construction (16 percent), education & health services (13 percent), financial activities (13 percent), information (13 percent), nondurable goods manufacturing (13 percent), mining (13 percent), other services (13 percent), government (12 percent).

When compared with the third quarter of 2017, employers reported slightly stronger hiring prospects in four industry sectors nationwide: construction, leisure & hospitality, other services and professional & business services. For two of these sectors – other services and professional & business services – hiring intentions are stronger than at any point since they were first analyzed nine years ago. In addition, employers in durable goods manufacturing reported the strongest intentions in the past 10 years.

“Technological disruption is transforming manufacturing into a high-tech, high-skilled industry,” said Michael Stull, senior vice president, Manpower North America. “At the same time, demand for ‘Made in America’ continues to grow and organizations are stepping up their manufacturing efforts here on U.S. soil.” From New York to New Mexico, he said, manufacturing companies are looking for increasingly specific skills.

“That’s why we’re working with companies like Rockwell Automation to build the right-skilled advanced manufacturing workforce to help fuel America’s growth,” he said. “Other sectors would do well to follow the upskilling trend – the skills of the future will look very different from today. We can’t afford to wait and see exactly what these skills might be. We need to build the plane while flying it too.”

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media

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