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November jobs report: Manufacturing sector leads with solid job growth

The latest job numbers portray a red-hot market, but a drop in the participation rate signals that employers struggle to find skilled workers.
By Ramona Schindelheim
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For the past few months, it’s been hard to get an accurate read on the U.S. job market.

This fall, the unemployment numbers were distorted by the impact of the Hurricanes Harvey and Irma that struck in August and September. The latest jobs report from the U.S. Bureau of Labor Statistics is out and that static is gone.

Here are the headlines for November: 228,000 jobs were created over the month; the unemployment rate remained steady at 4.1 percent and the average hourly earnings rose by a moderate five-cents to $26.55.

The topline number—jobs added—beat expectations and was led by solid gains in manufacturing. 31,000 new workers were added to the payroll, with 8,000 of those jobs going to machinists and 4,000 to makers of computer and electronic products.

Source – U.S. Bureau of Labor Statistics

“Manufacturing is strong, powered by a solid global economy and a softer U.S. dollar, healthy vehicle and housing industries and a booming tech sector,” according to Mark Zandi, Chief Economist for Moody’s Analytics in Philadelphia.

Economist Diane Swonk, Founder and CEO of DS Economics in Chicago, agrees that manufacturing is getting a boost from worldwide demand.

“Domestic demand is picking up, along with exports. This is the broadest, synchronous global economic growth we have seen since before the financial crisis,” Swonk says.

This year, manufacturing employment increased by 189,000. There are 12.5 million people working in manufacturing in the U.S., a million more than the post-recession low in early 2010.

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Other sectors continue to show steady gains. The professional and business services sectors added 46,000 jobs over the month, health care added 30,000 and specialty trade contractors added 23,000 jobs. Other major sectors: retail, hospitality and wholesale trade changed little over the month.

As we approach the New Year, let’s take a look at where the U.S. job market stands: The November gains marked the 86th straight month—more than seven years—that businesses added workers.

With one more jobs report to close out the year coming in January, the economy is on track to add nearly two million jobs in 2017. Since the recovery began in 2010, employers have added 16 million workers to their payrolls. Separately, the unemployment rate continues to remain at a 17-year low of 4.1 percent.

Despite the strong gains, employers continue to say that they’re having a hard time finding the skilled workers they need to fill hundreds of thousands of jobs. As economists say we are near or at full employment, there is significant competition over a shrinking workforce.

The number on the labor participation rate in November was unchanged, showing that employers are struggling to bring workers onboard. Over the past 20 years, the rate has dropped from 67 percent to 62.7 percent as many prime-age workers hit hard by the recession have given up and remain on the sidelines.

RELATED STORY: October jobs report: ‘Significant’ decline in the labor participation obscures drop in unemployment rate

Analysts say that half of the decline is due to Baby Boomers retiring. As that aging generation leaves the workforce, they often take their knowledge with them. This makes it even more difficult for employers looking to fill jobs with skilled workers. As the economy expands and workers remain hard to find, employers could opt to raise wages to attract new workers, but this could drive up consumer prices.

“There is a mounting threat that the job market will overheat next year. Overheating means that the job market is so tight that it ignites significant wage and price pressures, ultimately forcing the Federal Reserve to aggressively raise interest rates,“ Zandi says.

Yet employers are still holding off on raising wages. They remain lower than expected, up just 2.5 percent from a year ago.

“The shift to more professional and manufacturing hires did not deliver on the wage front. The professional hires were in lower-wage areas,” according to Swonk. “It is also worth noting that many manufacturing jobs outside of the vehicles sector are now minimum wage.”

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Dana Beth Ardi

Executive Committee

Dana Beth Ardi, PhD, Executive Committee, is a thought leader and expert in the fields of executive search, talent management, organizational design, assessment, leadership and coaching. As an innovator in the human capital movement, Ardi creates enhanced value in companies by matching the most sought after talent with the best opportunities. Ardi coaches boards and investors on the art and science of building high caliber management teams. She provides them with the necessary skills to seek out and attract top-level management, to design the ideal organizational architectures and to deploy people against strategy. Ardi unearths the way a business works and the most effective way for people to work in them.

Ardi is an experienced business executive and senior consultant who leverages business organizational transformation through talent strategies. She uses her knowledge and experience to develop talent strategies to enhance revenue and profit contributions. She has a deep expertise in change management and organizational effectiveness and has designed and built high performance cultures. Ardi has significant experience in mergers, acquisitions, divestitures, IPO’s and turnarounds.

Ardi is an expert on the multi-generational workforce. She understands the four intersecting generations of workers coming together in contemporary companies, each with their own mindsets, leadership and communications styles, values and motivations. Ardi is sought after to assist companies manage and thrive by bringing the generations together. Her book, Fall of the Alphas: How Beta Leaders Win Through Connection, Collaboration and Influence, will be published by St. Martin’s Press. The book reflects Ardi’s deep expertise in understanding organizations and our changing society. It focuses on building a winning culture, how companies must grow and evolve, and how talent influences and shapes communities of work. This is what she has coined “Corporate Anthropology.” It is a playbook on how modern companies must meet challenges – culturally, globally, digitally, across genders and generations.

Ardi is currently the Managing Director and Founder of Corporate Anthropology Advisors, LLC, a consulting company that provides human capital advisory and innovative solutions to companies building value through people. Corporate Anthropology works with organizations, their cultures, the way they grow and develop, and the people who are responsible for forming their communities of work.

Prior to her position at Corporate Anthropology Advisors, Ardi served as a Partner/Managing Director at the private equity firms CCMP Capital and JPMorgan Partners. She was a partner at Flatiron Partners, a venture capital firm working with early state companies where she pioneered the human capital role within an investment portfolio.

Ardi holds a BS from the State University of New York at Buffalo as well as a Masters degree and PhD from Boston College. She started her career as professor at the Graduate Center at Fordham University in New York.

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