Retailers and other companies have been steadily adding jobs in 2014.
WASHINGTON (MarketWatch) — The economy has settled nicely into hiring grove since the early spring, adding more than 238,000 jobs a month and putting the U.S. on a path to produce the strongest employment gains in 15 years.
What’s still missing, however, is a big uptick in wages that typically occurs when the unemployment rate shrinks quickly, or the occasional huge job gain in the 350,000-plus range, the telltale sign of an economy in full-blown recovery mode.
Wall Street is expecting more of the same when the November employment report is released on Friday. Economists polled by MarketWatch forecast a net increase of 230,000 jobs. Other monthly reports on auto sales, manufacturing and construction are also projected to show decent gains that underscore the improvement in the economy since a shockingly weak first quarter.
Steady as she goes isn’t a bad thing. The unemployment rate has shrunk rapidly over the past year and it’s likely to fall another notch to 5.7% from 5.8%, bringing it down to the lowest level since mid-2008. And hourly wages are likely to continue to rise at a 2% annual rate as they have done over the past four years.
Still, the recovery won’t fully hit its stride until wage growth accelerates sharply or the economy produces the kind of employment gains that rapidly shrinks the pool of some 18 million Americans who want a full-time job but can’t find one. That’s still very high by historical standards despite a big decline over the past few years.
Many economists think the U.S. is getting close to that point, but it’s not there yet.
“While the labor market is improving, I don’t think anyone would argue that it’s great,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Manufacturing on ice?
In the runup to the jobs report, investors will scrutinize the latest Institute for Supply Management survey of industry executives to see if there are signs of the manufacturing sector cooling off. Back-to-back 1.3% declines in September and October in a key measure of business investment have raised concerns.
Manufacturers boosted production in the spring and summer, and have added nearly 130,000 jobs in 2014, making it one of the fastest growing sectors of the economy. Yet slumping growth in Europe and a slowdown in China might be hurting U.S. exports and causing companies to rethink their spending plans. Manufacturers might also want to take a breather after the rapid expansion in production earlier in the year.
“It’s a combination of sluggish growth abroad, coupled with the pace of spending being so strong in the prior quarters,” said Sam Bullard, a senior economist at Wells Fargo.