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Surprisingly Good December Jobs Report

January 4, 2019 Kathleen Sullivan No Comments

U.S. December Nonfarm Payrolls Grew by 312,000; Jobless Rate Rose to 3.9%

Employers added an average of 220,000 jobs a month in 2018, the best growth since 2015

By 
Paul Kiernan and 
Sarah Chaney 
Updated Jan. 4, 2019 9:49 a.m. ET  https://on.wsj.com/2R9x5x3

 

WASHINGTON—U.S. employers added jobs in December at the fastest pace since February and wages surged, suggesting the economy maintained strong momentum at the end of 2018 even as financial markets sank.

U.S. nonfarm payrolls increased a seasonally adjusted 312,000 in December, the Labor Department said Friday, the biggest jump since February. Average hourly earnings rose a seasonally adjusted 0.4% from November and 3.2% from December 2017, the best full-year gain since 2008.

A separate survey of households showed the unemployment rate climbing to 3.9% from 3.7% in November, though this was mainly due to more workers entering the workforce. 

Economists surveyed by The Wall Street Journal had expected the economy to add 176,000 new jobs in December, wages to rise 0.3% from November and the jobless rate to fall to 3.6%.

“I’m doing really good,” said Jessica Baldwin, 27, who paints houses for a living alongside her brother in northern Utah, where the housing market is growing. She said her business was strong all through the holiday season, when it typically slows, and that she’s considering starting a limited-liability company so she can hire more workers. “I have to turn people away because I don’t have the capacity to take on their work.”

Employers added an average of 220,000 jobs a month in 2018, running ahead of the previous year’s pace of 182,000 per month and the best job growth since 2015. This came despite a tighter labor market. More broadly, U.S. payrolls have grown for 99 straight months, by far the longest stretch of steady hiring on record.

In December, every private-sector industry except information added jobs, with some of the biggest gains coming from construction, education and health services. Payrolls at all levels of government rose by 11,000 last month.

 
Pay Raise
The annual growth in average hourly earnings for private-sector workers rose 3.2% in December.
 
 
 
 Average hourly earnings for all private-sector workers increased 11 cents last month to $27.48. December was the third straight month in which wages rose more than 3% from a year earlier. That had not previously occurred since the recession ended more than nine years ago.

Helping to explain the uptick in joblessness, the labor force participation rate rose to 63.1%, matching its highest level since 2014, from 62.9% in November. Participation has been low by historical standards in recent years as the U.S. population ages, but economists say rising wages and good job prospects may be pulling workers back into the labor force. 

A broader measure of unemployment, which includes discouraged workers and those working part-time for economic reasons, remained stable at 7.6% in December. 

 
Jobless Rates
Unemployment rose to 3.9% in December while a broader measure including underemployment held steady at 7.6%.
 
 

The latest employment figures provide a significant counterweight to recent signs of slowing momentum in the U.S. economy. But economists cautioned that the underlying data were collected early in December, before the federal government partially shut down and the recent selloff in financial markets accelerated.

A closely watched gauge of manufacturing activity posted its largest one-month decline last month since the 2008 financial crisis, the Institute of Supply Management said Thursday. Consumer confidence, though still solid, also fell sharply in December amid uncertainty about the economic outlook this year.

Economists expect growth to slow in 2019 as the boost from last year’s tax cuts fades, higher borrowing costs weigh on businesses and consumers, and the Trump administration’s trade policies disrupt U.S. companies’ supply chains and business prospects abroad. Federal Reserve officials project U.S. gross domestic product will expand 2.3% this year, down from around 3% in 2018.

Tech giant Apple this week lowered its revenue forecast for the first time in more than 15 years due to ebbing iPhone sales in China. White House economic adviser Kevin Hassett said Thursday that other U.S. companies are likely to face growing difficulties in the Chinese market in the months ahead as the world’s second-largest economy slows amid trade negotiations.

The uncertainty has weighed heavily on financial markets. U.S. stocks in 2018 saw their worst yearly losses in a decade, with the Dow Jones Industrial Average closing Thursday almost 16% below its September peak.

Still, widespread employment and rising incomes can go a long way toward maintaining growth momentum in an economy where consumer spending amounts to more than two-thirds of GDP. Early data suggest retailers had their best holiday shopping season in six years, while inflation has remained remarkably tame despite accelerating wage gains and robust consumer spending.

“We may be worried about trade, we may be worried about political uncertainty, we are worried about the Fed at this point, we’re certainly worried about financial markets…but the consumer is still in good position,” said Josh Wright, chief economist at iCIMS Inc. “That’s one thing that it seems like the markets are a little out-of-step with the economists on.”

If hiring remains strong and wage growth continues to accelerate in coming months, it could force the Federal Reserve to consider raising interest rates further in 2019 despite slowdown concerns. That’s because many policy makers believe higher wages eventually fuel inflation. 

It has also made it challenging for some companies to find workers.

At Lizard’s Thicket, a Columbia, S.C.-area restaurant chain serving up Southern dishes, payrolls fell last year despite stable demand. Bill Johnson, payroll and benefits manager at Lizard’s Thicket, said a nearby Amazon distribution center, which pays well above the restaurant’s average rate, is probably snatching up some workers. Wal-Mart poses a competitive threat, too.

“Bigger companies like that that are in town are harder and harder to compete with,” Mr. Johnson said. “Everybody’s gotta keep up with the Joneses.”

in Economy

September Jobs Report, 3.7% Unemployment Rate, Lowest Since 1969

October 7, 2018 Kathleen Sullivan No Comments

3.7% Unemployment Rate, Lowest Since 1969 - Positive For Housing
The September Jobs Report in 9 Charts

 

Oct 5, 2018 9:19 am ET, https://on.wsj.com/2Qz3Yyb

U.S. employers added 134,000 jobs and the unemployment rate fell to its lowest level since 1969 in September.

The unemployment rate of 3.7% is now the lowest since 1969. Broader measures of unemployment, which include discouraged workers who have given up searching for work, touched the lowest level since that data began in 1994. The broadest measure of underemployment, which also includes part-time workers who would like full-time work, remains higher than in the late 1990s and early 2000s.

 
Wage Growth
Change in average earnings from a year earlier
Weekly wages increased about 3.4% while hourly wages are up about 2.8% over the past year. Most of those gains, however, are only a little bit higher than the inflation rate.
 
 
 
The share of the population that is in the labor force—defined as those working or actively searching for work—has hovered a bit below 63% this year. The rate has seen little sustained improvement or deterioration for the past five years. The share of the population that works was little changed last month, but has trended upward in recent years.
 
 
Participation rates are much higher for workers ages 25 to 54, where people are less likely to be out of the labor force due to retirement or education. The labor-force participation rate and employment-population ratio have both declined slightly in recent months.
 
 
 
The median spell of unemployment now lasts about nine weeks. This is much improved from the years right after the recession, but is still a few weeks longer than was typical during the strong labor markets of the late 1990s. Although job loss is now relatively rare, when it happens it can linger a bit longer than usual.
 
 
Even as the economy has improved, workers with different education levels face much different rates of unemployment. Those without a high-school degree have 5.5% unemployment while college graduates have an unemployment rate of just 2%.
 
 
Unemployment rates have trended down for workers of all races and genders in recent years. The unemployment rates for white women, black men and Hispanic women are all at the lowest in at least several decades.
 
 
With nine months down, 2018 is shaping up to be one of the stronger years of job growth since the recession.
 
 
Related Article: 

U.S. Unemployment Rate Falls to Lowest Level Since 1969 https://on.wsj.com/2Obbq68

in Economy

American 6.7 Million Job Openings Now Outnumber the 6.3 Million Jobless

June 7, 2018 Kathleen Sullivan No Comments

American Job Openings Now Outnumber the Jobless

 

U.S. job openings rose to 6.7 million at the end of April, compared with the 6.3 million Americans who were unemployed

 
Wall Street Journal: Updated June 5, 2018 3:28 p.m. ET

For the first time since such record-keeping began in 2000, the number of available positions exceeded the number of job seekers, the Labor Department said Tuesday, a shift that is rippling across the economy and affecting the behavior of employers and workers.

U.S. job openings rose to a seasonally adjusted 6.7 million at the end of April, a record high, and more than the 6.3 million Americans who were unemployed during the month. Openings had exceeded the available labor pool beginning in March, according to revised figures released Tuesday.

The figures are the latest sign the U.S. is facing a historically tight labor market. The jobless rate ticked down further in May to a seasonally adjusted 3.8%, the lowest since April 2000, the Labor Department said last week. The last time the rate was lower was in 1969, when young men were being drafted into the Vietnam War.

 

The labor market is forcing employers to rethink their approach to hiring, said Terri Greeno, owner of an Express Employment Professionals office in Crystal Lake, Ill. She is asking clients if they are being realistic in their demands for workers with clean criminal histories and higher levels of education.

“Is it a health and safety issue? If not, you have to ask if those demands are really related to the outcome on the job,” Ms. Greeno said. “When the unemployment rate is this low, you’re really competing for workers who already have jobs.”

Her staffing firm is taking extra steps to fill light industrial and office jobs, reaching out to 45,000 people it has placed in positions in the past 15 years and asking if friends or family would be willing to take on work.

“This is a very tight labor market,” said Adam Kamins, a senior economist at Moody’s Analytics. “Most everyone who wants a job has one.”

For workers, that’s good news. On the other hand, a tighter labor market presents several challenges to businesses. If they can’t find workers to meet the demand for their products, they can’t help the economy grow. They may instead opt to close the restaurant early or not run a third shift at the factory.

Firms may need to pay more to attract workers, and some already are. That raises costs and would cut profit margins if higher prices can’t be passed on to customers. If prices are raised, that stokes stronger inflation, which already has been accelerating in recent months.

Federal Reserve policy makers are watching closely. Emergence of worker shortages and stronger inflation could signal the economy is overheating, raising the need to lift interest rates more aggressively than the slow, moderate path they have signaled.

For now, the market is opening up possibilities for those who have struggled in recent years. Geremy Mincey, 26 years old, had bounced between temporary jobs since dropping out of college seven years ago, working at factories, fast-food restaurants and even as the mall Easter Bunny. He would often go months between paychecks.

Earlier this year, he landed a temporary job as a saw operator at Williams Metals and Welding Alloys in Birmingham, Ala. Last month, the firm asked him to take a full-time position with health benefits and retirement savings.

“I feel like I broke the cycle,” he said.

There are, however, still an elevated number of Americans who are stuck in part-time jobs and would prefer full-time work. And others are employed but not in the jobs they want.

Those include John Matous, a 38-year-old who works at a McDonald’s in Mason City, Iowa. He is an Army veteran with an associate degree in medical administration from a local community college. He would like to work at doctor’s office but so far has been turned down.

“I just need a chance to prove myself,” he said.

Meanwhile, the share of Americans who are working or seeking work has generally declined for almost two decades. That gives employers fewer potential workers to draw from, but also suggests there remain hundreds of thousands of Americans who could be drawn back into the labor force.

And they may be waiting for better wages. Hourly pay for nonsupervisors rose 2.8% in May from a year earlier, the best annual gain since mid-2009. But the last time unemployment was as low, wages for those workers rose 3.9% from a year earlier.

The largest number of April openings, 1.3 million, were in the broad business-services sector, which includes everything from accountants and software developers to temporary staffers and clerical workers.

There were also ample job openings in some of the lowest-paying fields. There were 844,000 accommodation and food-service jobs open in April and 735,000 unfilled retail positions.

To attract workers, the Saladworks restaurant chain has raised its starting wages about 5%. It also has relaxed standards on tattoos and piercings, allowed employees to wear jeans and bandannas, and gotten more flexible about schedules.

“If you tell someone they can’t have Friday off for prom, they’ll quit,” Chief Executive Patrick Sugrue said. “They know they can find another job on Monday.”

https://www.wsj.com/articles/american-jobs-outnumber-the-jobless-1528212776

Write to Eric Morath at eric.morath@wsj.com

        

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