What to Watch for in Friday’s Jobs Report

This June marks eight years since the end of the Great Recession. How long should we expect today’s remarkable expansion to continue? We’ll get some early clues in this Friday’s jobs report -- here’s what we’ll be watching for:

• 146,000 new jobs added to nonfarm payrolls in June;
• Unemployment steady at 4.3 percent;
• Average hourly wages up 2.3 percent from one year ago.
• Labor force participation rate down slightly to 62.6 percent.

When it comes to the monthly BLS jobs report, no news is often good news. Today’s labor market has established an eight-year track record of remarkable stability, chalking up 80 consecutive months of jobs gains, a 4.3 percent unemployment rate, and steady -- although historically weak -- gains in Americans’ paychecks. Today’s steady growth is all the more remarkable considering the many headwinds facing the economy that have materialized in 2017. Rising Fed interest rates, growing political tension with U.S. trading partners, and policy turmoil in Washington have emerged as risks on the horizon. It’s testimony to the economy’s underlying health, positive economic and job market news continues to roll in month after month despite these headwinds. So far in 2017, the economy has added a respectable average of 162,000 new jobs per month. That’s down from previous years, but is a strong showing for an economy that’s eight years into an expansion. More importantly, that’s more than enough job growth to keep the nation’s economy close to -- or perhaps creeping below -- full employment. Economists often talk about a concept known as the “break even” pace of job gains. Each month, some workers leave the labor force for retirement, injury or other reasons, while a slightly larger number join the workforce. To assure there are enough jobs to keep this growing pool of workers fully employed, economists estimate we only need to add around 110,000 new jobs each month -- well below today’s pace. For this reason, it’s natural to expect the pace of monthly job gains to slow during today’s late stage of the business cycle; we expect to see around 146,000 new jobs added to payrolls in June.

The Wage Puzzle

Unemployment today is setting all-time record lows in many cities. We’d normally expect workers to be in a strong bargaining position in this environment, negotiating for pay gains. But while wages are rising rapidly for key in-demand roles in health care, professional services and technology, across-the-board wage gains for the economy as a whole are remarkably weak. Glassdoor’s latest June Local Pay Reports paint a dismal picture of U.S. pay growth. Median base pay for full-time workers rose just 1.7 percent from a year ago according to salaries reported on Glassdoor. That pace has fallen steadily for five consecutive months, down from a 3.1 percent pace in January. It’s a worrying trend, and almost certainly reflects the weak productivity growth figures that have plagued the economy for years.

Job Postings Remain Strong -- Even Retail

One of the best real-time indicators of the economy we have access to at Glassdoor is online job postings. As of June there were about 5.45 million unique job postings available on Glassdoor -- a figure that is rising steadily and shows few signs of slowing. Online postings are a forward-looking measure of hiring intent by employers. If a slowdown were on the way, they would be one of the first things employers would scale back on. But as of today, hiring overall looks strong and steady. Surprisingly, that even includes the beleaguered retail sector. Weak retail job gains have gotten a lot of attention recently, thanks to falling department store revenue and high-profile suburban mall closures. However, the latest data from Glassdoor reveal no overall drop in retail job postings so far. As of Friday, June 30, 2017 there were 658,000 unique retail job openings available on Glassdoor. That’s up from last month, and about the same number as were available last September. Rather than an overall decline, retail in America today is undergoing a shift. Consumers are shifting toward smaller, more boutique “experience” retailers, and away from big-box “commodity” retailers -- those commodity buying dollars are increasingly being spent online. The result is a redistribution of jobs in the retail sector, with many department store job losses being offset by gains among smaller niche retailers. Looking at the data as of June, the volume of retail job postings on Glassdoor doesn’t yet support a story of dramatic overall retail job decline in the U.S. However, that’s a trend we’ll watching closely in coming months for any sign of a reversal. To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.