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United States | Portland, OR

Report | Portland Employment Update - September 2016


  • Contractions and slowdowns in key subsectors pulled down October growth
    • October saw 161,000 net new jobs, not meeting consensus expectations of 170,000-175,000 from many observers. However, revisions to previous months were positive and brought year-to-date growth to 1.9 million jobs. This is still below the YTD 2015 figure of 2.2 million, but volatility has been spurred by minimal slack and ability to recruit talent in many primary and secondary markets at the same rate as in 2014 and 2015.
    • A small contraction in retail trade (-1,100 jobs) and a sharp slowdown in leisure and hospitality (+10,000 jobs), traditionally two of the largest contributors to monthly growth, pulled down October gains. Other major subsectors such as PBS, health and construction, were mostly stable over the month. Combined with flat expansion of the civilian labor force, unemployment dropped to 4.9 percent.
  • Despite slower growth, wages rose at their fastest rate since 2009
    • The highlight of October was wage growth, with 12-month gains totaling 2.8 percent, the highest figure since 2009. Across the board, with the notable exception of education and health, wages rose by more than 2.0 percent, with most in excess of 3.0 percent.
    • Sustained and accelerating wage growth will continue to play a critical role in keeping personal consumption expenditures elevated. Consumer spending has been and will remain necessary for GDP growth in the absence of business investment.
  • Fed rate hike likelier due to continued job creation and rising inflation and wages
    • Although the Federal Reserve once again did not raise interest rates in November, continued growth in the labor market and in particular upward pressure on wages bodes well for a potential rate hike in December.
    • More importantly, the consumer price index is beginning to make a more sustained rebound: after being near-zero for much of 2016, it is now up 1.5 year-over-year. This is below the 2.0-percent target, but the core index (excluding food and energy) is up to 2.2 percent. With wage growth outpacing inflation and rising steadily, fundamentals are likely strong enough for the Fed to act.

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