Mellody is president of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News.
Tom: Good morning!
Mellody: Good morning, Tom.
Tom: you are joining us this morning to talk about the employment picture? Mellody: That’s right! The news from Friday’s labor department report was very good, Tom, and that means a positive outlook for the economy, and for any jobseekers out there!
Tom: What did the report have to say?
Mellody: Overall, the report showed impressive expansion, tom. Economists had predicted that 230,000 would be added in December, and the labor department reported that the economy added 252,000 jobs last month, beating expectation. The unemployment rate fell to 5.6%, the lowest since June of 2008. Private-sector employers continued to add jobs at a solid pace in December, suggesting the labor market fundamentals remained strong.
And even though December’s jobs number is down from a spectacular 353,000 jobs added in November, it is still very positive. Overall in 2014, 2.9 million new positions were created! That is the best annual figure since the late 1990s! If 2015 sees the same rate of job growth as 2014, the us will be back at full structural employment – around 5% unemployment – by the end of the year! On the back of this good news, the markets reversed a three days slide, and clocked in their first back to back triple digit gains since December 17-18!
Tom: Was there any bad news in the report?
Mellody: The continued worry is that even as the economy adds jobs, wage growth continues to be hard to come by. November’s report showed fairly good wage growth of .4%, but we need to string together a number of months like that to have real progress. Wage growth in December was actually -.2%, when the consensus among economists was .2%, so that is bad news.
We continue to be in a two steps forward, one step back pattern on wage growth. However, January 1 did see 29 states raise their minimum wage, which means a majority of states now have minimum wages higher than the federal minimum wage. Hopefully 2015 will see more good news on the wage front!
Tom: OK. What is driving job growth, Mellody?
Mellody: To put it simply, the American consumer is back. We have seen consumer confidence hit seven-year highs this past week on the Bloomberg index, spurred by lower gas prices and increasing confidence among employees about job stability. Additionally, the interest rates on car loans and home loans are near 3 year lows, which have also helped keep some money in people’s pockets. This extra confidence and extra cash has led people to spend money, boosting businesses and driving up wages. So right now, we are in a reinforcing cycle of better hiring leading to more consumer spending.
Tom: Does this have people looking for new jobs?
Mellody: You bet, Tom. After all, there is no time like the present to find that next position! That’s the mantra for many workers as 2015 kicks off. According to a survey by career management experts right management, 86% of workers in North America say they plan to actively look for a new job this year. That’s up from 83% last year and just 60% at the peak of the recession in 2009.
Now that we are nearing full employment and seeing good number, people are anxious to make professional moves that they had been putting off over the past few years. And January is the month that the search really heats up. The first Monday after the new year is the busiest day for job search, and January is the busiest month of the year. On Monday, job searches were up 56% from the December average, according to job search engine Simply Hired.
Tom: What sectors are hiring right now?
Mellody: Well, the good news is that jobs growth has been positive across the board, for the most part, and more than 1/3 of all employers expect to add full time employees in 2015. Trade and transportation, manufacturing, professional services and the financial sector all showed strong numbers in December. And throughout the year, information technology, financial services, manufacturing, and healthcare, will be big according to CareerBuilder.
The biggest demand is in jobs tied to revenue growth, digital innovation, and customer loyalty—think sales, data analysis, and customer service. The one area that we are looking for some weakness in is energy or energy-related companies, as cheap energy prices put pressure on companies, causing them to pause expansion plans or even lay off workers. Overall though, 2015 is a great year to be a jobseeker, so get out there and find your new position!
Tom: Thanks, Mellody! Have a good week!
Mellody: You too, Tom!