Job growth slowed in November after an impressive gain in the previous month, but signals from wages and unemployment suggest that labor market conditions remain generally healthy. The transportation and logistics industry had another strong month of hiring, with impressive job gains from trucking, parcel, and warehousing companies.
The Bureau of Labor Statistics (BLS) reported that the economy added 155,000 workers to payrolls during the month, down from a downwardly-revised gain of 237,000 in the previous month. This fell well short of consensus estimates of a 198,000 gain, but is still a solid number on the heels of last month’s impressive result. Job growth has now been positive for a record 8 years and two months in a row, and has averaged over 200,000 per month since the start of 2018.
Other measures of labor market health suggest that hiring conditions remain generally tight in the economy. The unemployment rate held steady at 3.7%, matching the lowest rate in the economy since 1969. Wage growth also continued to advance at a solid pace in this morning’s report, as average hourly earnings rose 0.3% from October’s levels. Yearly earnings growth exceeded 3% last month and remained unchanged at 3.1% in November. This would suggest that the shrinking pool of available workers is leading businesses in the economy to raise wages in an effort to attract and retain employees.
As is usually the case, growth during the month was led by the service sector, which added 133,000 workers to payrolls during the months led by big gains in health care, retail, and professional services. Manufacturing also saw a solid gain in employment in November, adding 27,00 jobs during the month.
Transportation and logistics hiring remains strong
The transportation and logistics sector also experienced impressive job growth, as employment grew by 25,400 during the month. As was the case in October, much of the gain was driven by parcel companies, which saw the largest monthly job gain in nearly two years with 9,900 workers added to payrolls. Warehousing and storage also enjoyed strong employment growth, adding 6,200 jobs in November
The trucking industry also saw solid hiring during the month, adding 4,500 workers during the month on a seasonally adjusted basis. This was offset by downward revisions to previous data, which revealed a slight decline in trucking hires in October. Still, trends within the industry continue on a general climb, and employment within for-hire trucking is now 2.5% higher than at this point last year.
To put this in perspective, consider that employment in the economy overall is growing at a 1.7% pace. This would suggest that the trucking industry is gaining some ground as it attempts to address the capacity crunch. Hiring in the industry is not occurring as quickly as it among parcel companies and warehouses, which benefit from exceptionally strong growth in e-commerce demand. Trucking employment is growing faster than other modes of surface transportation however, and is even outpacing manufacturing hiring in the economy.
Behind the numbers
Not many surprises in this morning’s report, as the wage and unemployment figures feel almost exactly in line with expectations, even if the job growth disappointed. Most have been watching these monthly numbers for some kind of sign on what future Federal Reserve policy will be. This morning’s results would lean towards a more cautious approach to rate hikes, falling in line with Chairman Powell’s suggestion that there may be fewer rate hikes next year.
The combination of strength in retail, couriers, and warehousing suggests that much of the hiring during the month was really just stronger than normal seasonal hiring to gear up for what most believe is a particularly strong holiday e-commerce season. E-commerce isn’t going anywhere anytime soon, but it will be interesting to see whether there is some sort of reversal once we get to the other side of the holiday retail season.
For the trucking industry, the revisions took some of the wind out of what looked to be another strong monthly number. Still, the trends in hiring have shifted in a meaningful way over the last year. November’s results are a continuation of that upward trend and suggest that capacity continues to expand in the industry.
Ibrahiim Bayaan is FreightWaves’ Chief Economist. He writes regularly on all aspects of the economy and provides context with original research and analytics on freight market trends. Never miss his commentary by subscribing.