The November jobs report shows a robust job market in the US, with strong employment and wage growth. Despite cooler job growth than earlier this year, the economy remains strong, supporting consumer spending during the holidays. The unemployment rate fell to 3.7% from 3.9%, the lowest in over 50 years, and more workers are entering the labor force. Wage growth has outpaced inflation, resulting in real wage gains for workers. The Federal Reserve may take note of these positive indicators when considering future rate hikes. Average hourly earnings rose by 4.0% compared to the previous year. However, the number of job openings in October was the lowest since March 2021.
The services sector in the labor market is still strong, with the Institute for Supply Management’s index of activity at service businesses showing growth in November. The employment component remains solid, while prices suggest diminishing inflation pressures. New orders are unchanged, indicating a stable outlook for the sector.
An analysis by CompTIA shows that small and medium-sized businesses (SMBs) in the tech services and software development sector continue to hire. The tech sector employment remained unchanged, with nearly 5.6 million workers. AI talent is in high demand, with AI positions accounting for 12% of job postings. Tech occupations throughout the economy declined, but the unemployment rate for tech occupations is lower than the national rate.
According to the University of Michigan’s consumer sentiment index, American consumers felt much better about the economy in early December, with a significant increase in sentiment across all age groups and political affiliations. This improvement in consumer sentiment raises questions about why Americans felt down about the economy despite positive indicators such as cooling inflation, strong economic growth, and healthy job growth.
Why do we care?
The strong employment and wage growth support consumer spending, which is crucial during the holiday season. This increased spending power can translate into higher demand for tech products and services, especially as businesses and consumers alike invest in technology-driven solutions. The stability in new orders points towards a sustained demand for services, including those in the tech realm. This allows for more predictable business planning and investment.
And, there is a clear indication of the growing importance of AI in the tech ecosystem. This trend is a call to action for IT service firms to invest in AI capabilities to remain competitive and meet the evolving demands of the market. Things look good for the holidays.