■ The job market is finally showing clear signs of improvement. In 2016, 170 000 payroll jobs were created in the non-farm business sector, the strongest pace of job growth since 2007.
■ The unemployment rate fell by 0.3 points to 10.1% in 2016 in annual average terms, the biggest decline since 2008.
■ Even so, the job market is still far from being in good health. Further measures are still needed to remedy job market dysfunctions and mass unemployment. Once again, this will be one of the key challenges facing the next president.
The year 2016 was a good one for the job market, clearly for employment and slightly less so for unemployment. The job market recovery that began in 2015 has not only been confirmed, but it has accelerated (see chart).
The net creation of 62,200 non-farm payroll jobs in Q4 2016 (INSEE’s first estimate) brings the full-year 2016 total to 170,000, and to 191,700 when measured on a year-on-year basis. These figures show a significant improvement compared to 2015, when average annual job creations totalled 24,000, or 99,000 year-on-year in Q4 2015. The main drivers of job growth were in the services sector (159,000 net job creations in 2016, up from 82,000 in 2015) and temporary employment services (53,000 and 29,000 jobs, respectively). Industry and construction continue to report net job destructions, but the figures have been diminishing (-29,000 vs. -40,000 in industry, and -13,000 vs. -46,000 in construction).
In 2016, the pace of job creations also reached its highest level since 2007, even though economic growth was much slower (averaging 1.1% last year vs. 2.3% in 2007). In fact, non-farm payroll employment grew at the same pace as growth in 2016, an exceptional situation synonymous with the crushing of labour productivity gains. Yet, although the dynamic pace of job growth augurs well for economic growth in the short term, the absence of productivity gains is harmful for longer-term prospects.
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by Hélène BAUDCHON