Adam Ozimek, chief economist at Upwork
The labor market has room to improve, as November’s healthy pace of job growth illustrates. While we should not read too much into a single month of data, the underlying trend continues to support the theory that the recovery from the Great Recession is incomplete. Job growth of 266,000 in November significantly exceeded consensus expectations. Even after accounting for the temporary gains from the end of the autoworkers strike, this is a good month of growth. With revisions, the three month average is now 205,000.
While businesses complain that they cannot find workers, there are plenty of people out there to hire, businesses simply have to work harder to find them than they used to. The steady growth in payrolls alongside below target inflation make it clear that the economy is not yet hitting capacity constraints. This should be an important lesson for policymakers and many forecasters, who have underestimated how much slack has remained in the labor market.
The fact that the economy continues to improve should not lead to complacency, however. The trade war and monetary policy that was until recently too aggressive have slowed job growth compared to last year. The trade war remains unresolved, and is both a headwind to job growth and a risk to the overall economy. In addition, benchmark data suggests that growth this year will be revised downward.
Altogether, the data suggests we continue to head in the right direction, but at a slower pace than we should be. It’s too soon to break out the champagne.