Job Gains Indicate Self-Sustaining Recovery

IRVINE, CA-The Bureau of Labor Statistics has released its November Employment Situation, which hints at an accelerating economy with data showing the lowest jobless rate in five years, according to Auction.com's senior economist Chris Muoio. Muoio says the BLS reported that 203,000 jobs were added, and last month's strong gain was barely revised, now measuring 200,000 added.

“Coupled with accelerating GDP and other solid metrics, the evidence is mounting for a self-sustaining economic recovery,” says Muoio. “Further improving the tenor of this report is the fall in unemployment from 7.3% last month to 7% this month.”

According to Muoio, last month, the household survey showed a large drop, skewing unemployment lower, but this month we see an entire retracement from that clearly erroneous sample with the addition of 818,000. “Additionally, the labor force participation rate ticked modestly higher to 63%, another encouraging sign. Further gains in labor-for participation will be the tell of increased confidence in the labor market.”

In addition, the strong headline figures continue to flummox the Maximus Advisors Employment Acceleration Index, which remained modestly negative at -16.5 in November, Muoio reports. “The index is designed to measure the depth of growth on a scale of -100 to 100, and its persistent negative appears to be due to the large federal government sector continuing to decline.”

Muoio also points out that housing and its related entities continue to drive growth as well, both through construction and retail sales. “Residential construction employment rose 1.4% over the last three months and is now 3.7% higher than a year ago. Non-residential construction is also expanding, with employment rising 1.3% over the last three months.”

Building materials/garden stores continue to hire, as do furniture stores, as increasing home equity and housing turnover is driving remodeling and renovation spending, Muoio adds. “This is our biggest source of concern going forward, as housing statistics have softened into year-end as interest rates rose. Should the housing recovery pause, it is likely the growth in these sectors will as well.”

As GlobeSt.com reported earlier this week, the Bureau of Economic Analysis revised its initial estimate of the third-quarter GDP and reports that the US economy grew at a much stronger rate than previously stated, according to Muoio, who says the revised numbers bring third-quarter GDP to a real annualized 3.6%—well above the expected reading of 3.1% and the initial estimate of 2.8%.

Stay tuned for an update to this story that will explore additional growth drivers revealed by the BLS's report.