The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Chief Economist Dr. Andrew Chamberlain and Senior Economist Daniel Zhao:
The nation’s labor market closed out the 2010s decade with a moderate 145,000 new jobs added to payrolls in this morning’s December BLS jobs report, leaving the unemployment rate unchanged at 3.5 percent. That caps off the 2010s with a remarkable 111th straight months of job gains, setting the stage for more robust hiring as we enter the 2020s.
Pay growth was incredibly disappointing in December, stumbling to 2.9 percent year-over-year, down from 3.1 percent last month. That reverses the recent trend toward escalating pay growth we’ve seen as the labor market has tightened in recent years, and remains the one aspect of the job market that hasn’t fully recovered during the decade since the Great Recession. This mirrors other hidden job market weaknesses we’ve seen on Glassdoor, with overall U.S. job postings down -1.8 percent in December.
While the BLS reported slower pay growth in December, some of that decline may be because of compositional effects as many of the jobs added in December were in retail. Glassdoor data, which controls for those effects, shows pay growth remained stable at 2.3 percent in our December Job Market Report.
Heading into 2020, the two biggest risks facing the job market are oil market instability due to escalating conflict in the Middle East, and continued trade tensions. The manufacturing sector shed -12,000 jobs in December, and the scheduled signing of a phase 1 trade deal with China on January 15 is a positive start, putting a welcome Band-Aid on the severe hit U.S. manufacturing and agriculture sectors have taken in recent months.
The big story in today’s jobs report is the surprise decline in wage growth. This time last year, it seemed like we were finally going to see wage gains speed up, but 2019 threw cold water on that notion and today’s report caps a disappointing year for wage gains, relative to the optimism felt in late 2018.
The labor market added 145,000 jobs to payrolls in December and revisions to the prior 2 months subtracted 14,000 jobs. That puts average monthly payroll gains for 2019 at +176,000, the worst level since 2011 but still near the decade-long average.
To put a finer point on payroll gains over the 2010s: Even though 2019 was the slowest year for average monthly job gains since 2011, the difference is not large. After revisions over the next few months, 2019 may actually out-perform 2017. However, if you ignore the temporary boost from the tax cuts in 2018, the trend since 2014 appears to show slowing growth.
Retail was a big winner in December adding 41,200 jobs, boosted by a strong holiday season. Manufacturing disappointed, losing 12,000 jobs, but we’ll have to wait until the Phase 1 trade deal is signed in January to see if that’s enough for manufacturers to regain confidence and start hiring more.
Jobs growth in goods-producing sectors is still slowing dramatically year-over-year, even ignoring the temporary blip in October from the GM-UAW strike. Employment growth in services-providing sectors has been more stable through 2019.
Unemployment remains at 3.5 percent, tying the lowest value since 1969. The headline unemployment rate doesn’t capture the whole story, but the labor market is certainly stronger at the end of the 2010s than it was at the end of the 2000s.
Holiday season hiring for retail was strong despite a lousy November. It seems that retailers pulled hiring forward earlier into the season and adjusted hiring plans later as they surged to meet strong consumer spending. After many years of falling retail employment, 2019 may be a big inflection point for retail jobs.