ACE Report: Service sector sparks October jobs gain

The region reversed two months of job declines in October, adding 2,498 jobs, according to the Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted, the region saw employment rise to 1,171,849 from 1,169,351 a month earlier, a 0.2% increase.

While the service-producing sector shows a year-over-year gain of 5,407 jobs, the goods-producing sector declined by 2,181 jobs. Smoothing out the month-to-month figures, on a year-over-year basis, the seven-county workforce increased 3,226 jobs, a gain of 0.3%, since October 2015.

The regional decline in the goods-producing sector echoes the national pattern. The United States lost 9,000 manufacturing jobs in October, according to the Bureau of Labor Statistics.

“Service employment has been growing, but manufacturing payrolls are either sluggish or declining,” reported Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The factory sector continues to face stiff headwinds, including weak global demand due to sluggish growth abroad, a strong dollar and low commodity prices.

Longer term, employment in the goods-producing sector peaked in July 1979 at 25,163,000. Since then, sector employment has declined by 5,548,000 — or 22% — to its current level of 19,615,000. Those jobs have been lost largely to automation and shop-floor tracking systems that increase efficiency and, to a lesser degree, to globalization.

A bright spot at the national level, Kleinhenz said, is the 0.4% gain in average hourly earnings, up 2.8% over the past year.

Economists at Pittsburgh-based PNC Financial Services Group called that growth in average hourly earnings the fastest increase in seven years.

“As the job market gets tighter, firms are responding to tougher competition for workers by raising pay,” the financial services firm said in its Nov. 4 economic report. “This is very good news for incomes and consumer spending.”

The Federal Reserve Board’s most recent Beige Book, which gathers anecdotal information on each region of the country, said of the Cleveland region, “Wage pressures were most evident in the construction and retail sectors across skill levels. Reports from staffing firms about job openings and placements were mixed, though all contacts noted an increase in the number of temporary positions.”

Seaonally adjusted data

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16(actual) 1,175,919   478,541   697,378 215,829 960,090
April (est) 1,169,858   476,032   693,826 215,323 954,536
May (est) 1,174,111   477,748   696,363 216,312 957,799
Jun (est) 1,172,025   476,883   695,141 216,156 955,869
Jul (est) 1,175,213   478,117   697,096 217,662 957,551
Aug (est) 1,171,067   476,593   694,474 214,553 956,515
Sept (est) 1,169,351   475,985   693,367 212,954 956,398
Oct (est) 1,171,849   476,981   694,868 213,697 958,152