On the heels of the Presidential debates where job creation was a main focus, the September employment report surprised many with a significant decline in the unemployment rate, despite relatively tepid job growth. The economy added 114,000 jobs this month, but it was the 7.8 percent unemployment rate that stood out – dropping below 8 percent for the first time since 2009. The decrease is partly attributed to more people counting themselves as employed after taking on part-time jobs. Private-sector employment added 104,000, largely led by healthcare (+44,000), transportation and warehousing (+17,000) and finance and accounting (13,000).
The Randstad Employee Confidence Index rose by 0.8 points in September, registering at 52.4
The Index measured measured 7.6 points higher than the year low of 44.8 in September 2011
45 percent of employees are confident in their ability to find a new job, a number that has held steady throughout 2012
The moderate pace of job growth and little progress making up losses from the economic downturn is why the issue of job creation continues to be a heated and central theme among the Presidential race. The remainder of the year is expected to continue growing, albeit at a slower pace.
- The retail trade sector added 9,400 jobs to its inventories, which was an increase from last month’s growth of 8,300.
- Wholesale trade lost 1,600 jobs in September after adding 7,000 in August but growing by 8,800 in July.
- The Professional and business services sector added 13,000 new jobs in September, which was not as good as the 19,000 added in August or the 41,000 more jobs in July.
national employment trends
- Non-farm payroll added 114,000 jobs in September
- Private-sector payroll rose 104,000 in September
- Healthcare: +44,000; Retail: +9,400; Professional and business services: +13,000
- Government: +10,000 jobs; Federal: +4,000; State: +13,000; Local: -7,000
- Temporary help services jobs were down 2,000 in September to a total of 2,533,800 jobs.
- This represents a sequential decline of less than 0.1 percent but year-over-year growth of 8.2 percent.
- The temporary help service’s market share is brightening. In third quarter of this year, market share was 1.90 percent.
- In 2Q 2012, the market share was 1.88 percent, and in Q1 2012 it was 1.86 percent.
services side of economy surprisingly positive
A bright spot this month came with the most recent Institute for Supply Management (ISM) Service Index findings, delivering its best reading in six months and climbing to 55.1 percent in September. This represented a 2.6 percent uptick from August and the 33rd straight month of expansion. According to the report, gains were driven by the highest level of new orders since March.
This latest news is particularly encouraging because it reflects the overall health of the services side of the economic equation. In fact, the services side of the economy employs about four of every five U.S. workers and accounts for 80 percent of the economy. Last month, we reported a concerning slowdown in manufacturing. This trend led the services sector to shoulder the majority of growth for the nation.
However, adding to the optimism was a relative bounce back of the ISM’s manufacturing index, which returned to expansion territory for the first time in four months in September. The gauge rose to 51.5 percent this month, improving from 49.6 percent in August.
- The Construction sector improved by 5,000 more jobs in September.
- Manufacturing declined by 16,000 last month after declining by 22,000 in August.
- Wholesale trade lost 1,600 jobs in September after adding 7,000 in August.
small gains in consumer’s financial situation
According to several recent reports, consumers appear to be more confident and positive about their own personal financial situation. The Thomson-Reuters/University of Michigan consumer sentiment index was 78.3, up from 74.3 in August, largely attributed to reduced debt levels and an increase in the value of assets from rising stock prices and home values. Another report from The Conference Board also showed more optimism among consumers this month. The survey of consumer confidence shows its highest level since February, based primarily on expectations that hiring will soon pick up and an improving housing market.
Our own Randstad Employee Confidence Index rose 0.8 points to 52.4 in September with workers feeling more confident in the future of their current employers and a higher level of job security. In fact, 56 percent of workers reported that they are not planning to job search in the next 12 months even though more indicated a greater sense of optimism in their ability to find alternative employment.
These measures of consumer confidence are closely watched because improved outlooks often lead to more spending, which accounts for nearly 70 percent of economic activity. The Commerce Department reported consumer spending rose 0.5 percent in August, although much of that gain was due to higher gasoline prices.
the impact of the fiscal cliff situation
Another crucial issue tied heavily to the November Presidential election and that could dampen consumer confidence levels is the conundrum that the U.S. government will likely face at the end of 2012 when the terms of the Budget Control Act of 2011 are scheduled to go into effect. Known as the “Fiscal cliff,” several changes will occur on December 31, 2012 unless a last-minute stop-gap measure is put into place. Among the changes, is the end of last year’s temporary payroll tax cuts which will result in a 2 percent tax increase for workers, as well as the end of certain tax breaks for businesses, and the start of taxes related to health care reform legislation.
Many economists are predicting that unless Washington succeeds in averting the scheduled tax increases and federal spending cuts, the economy will fall into another recession. The lingering questions and doubts as to whether this will happen, has many private employers and businesses fearful of hiring or making any other significant investments. That could mean a slow start to 2013 for job creation and consumer spending.