In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down the economic indicators of the last several days. Steady yet unspectacular job growth, along with improving consumer confidence and healthy retail sales, all point toward a gradual firming of the nation’s economic recovery.
The nation’s jobs recovery continued its slow and steady climb in November, according to the latest figures from the Bureau of Labor Statistics. The national economy added 120,000 jobs in November on a seasonally-adjusted basis, up from a gain of 100,000 jobs in October. Although it marked the 14th consecutive month of job growth, only three of the gains exceeded 200,000, which is essential for the economy to really gain steam.
The private sector continued to drive growth with an increase of 140,000 jobs in November, the 21st consecutive gain in private payrolls. Overall, the private sector has added nearly 3 million jobs since the recovery began, or roughly one-third of the 8.8 million jobs it shed during the recession.
On an industry level, restaurants were among the leaders in November, adding 32,700 jobs on a seasonally-adjusted basis. This marked the strongest monthly increase since February, and the 11th gain in the last 12 months. Overall, restaurant employment was up a solid 2.2 percent above its November 2010 level, the strongest 12-month gain in four years.
Restaurant industry job growth April - November 2011
The national unemployment rate fell to 8.6 percent in November, down from 9.0 percent in October and lowest level since March 2009. Several factors went into this decline though, including a sharp drop in the labor force. So it remains to be seen whether this is the start of a downward trend, or just a single-month blip.
On top of November’s job growth, consumer confidence bounced back from October’s 31-month low. The Conference Board’s Consumer Confidence Index rose to its highest level since July, as consumers were more bullish about both their present situation and expectations for the months ahead. The improving consumer sentiment no doubt contributed to solid retail sales over the Thanksgiving holiday, with many retailers reporting spending levels well above expectations.
The improving confidence also found its way to the restaurant industry, as restaurant operators reported a net positive outlook for the economy for the first time in four months. Twenty-six percent of operators said they expect economic conditions to improve in six months, while 22 percent expect conditions to worsen in the next six months. This followed three consecutive months in which pessimists outnumbered optimists, the first such occurrence since early 2009, according to the National Restaurant Association’s monthly Restaurant Industry Tracking Survey.
Restaurant operators' 6-month outlook for the economy
While the latest indicators suggest a firming of confidence, the economy is by no means out of the woods. There are still considerable risks moving forward, including Europe’s fiscal crisis and the negative short-term impact if the payroll tax holiday and emergency unemployment benefits are not extended through 2012. Overall, the economic recovery remains shaky, and ill-equipped to withstand significant external shocks.
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