by Daniel Zhao and Andrew Chamberlain
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 Senior Economist Daniel Zhao and Chief Economist Dr. Andrew Chamberlain:
The inaugural report for the 2020s shows the U.S. economy came out swinging in January, with solid jobs gains across a variety of sectors. In this morning’s jobs report from the Bureau of Labor Statistics (BLS), Employers added 225,000 jobs, well above expectations, and wage growth rebounded to 3.1 percent after a surprise decline in December. The unemployment rate ticked up to 3.6 percent, but it’s still near a 50-year low. Taken together, the first report of 2020 is a healthy one—showing that a possible redux of the roaring twenties updated for the 21st Century isn’t off the table yet.
Construction added 44,000 jobs—a sign of a healthy construction industry boosted by continued low interest rates. Manufacturing, however, lost 12,000 jobs, continuing a long streak of under-performance due to trade uncertainty. Service-providing sectors continue to be the rock for the labor market, adding 174,000 jobs. 47,200 jobs were created in the booming health care sector alone in January 2020. Almost enough to carry the entire U.S. labor market in one well-paying and geographically diverse industry.
In today’s report, the BLS also released benchmark revisions for the March 2019 employment level. Preliminary estimates had forecasted a 501,000 drop in employment, and they largely matched expectations, with a 514,000 downward revision, the largest since 2009. February 2019 job gains were revised down to +1,000 jobs just barely keeping the longest continuous streak in payroll gains in American history alive.
The January jobs report does not fully account for the impact of the coronavirus outbreak in China, which is disrupting global flows of goods and people and will likely be a drag in coming months on trade-exposed industries like manufacturing. While we don’t know how the outbreak will progress, it does make it even less likely that China will meet the terms of the already-ambitious Phase 1 trade deal.
And the overarching story for 2020 is the election. The administration is unlikely to attempt to rock the economic boat in an election year, but today’s report suggests the strong economic fundamentals may carry through 2020. The first report of the year sets the tone for 2020, and the labor market is getting off on the right foot.
Wage growth rebounded to 3.1 percent after dipping below 3 percent in December. That’s a huge sigh of relief, but wage growth is still below the early-2019 peak and is trending down. If strong job gains continue, 2020 may finally be the year that wage growth accelerates for American workers.
The unemployment rate ticked up to 3.6 percent, but a 0.1 percentage point move is nothing to worry about. We’d need to see a larger sustained increase to be concerned that unemployment is meaningfully increasing.
Construction performed very well in January, adding 44,000 jobs. Manufacturing lost 12,000 jobs as trade uncertainty is still high despite the signing of the Phase 1 trade deal with China in January.
Service-providing sectors continue to carry the labor market with large and consistent job gains. Goods-producing sectors have been more volatile with rapidly declining year-over-year growth, largely driven by manufacturing.
The downward benchmark revisions indicate that 2018 job gains were overstated, but not by enough to wipe out the surge in jobs added in that year. While 2019 employment was also revised down, average monthly job gains were basically unchanged: averaging 175,000 monthly jobs added in 2019 post-revision vs. 176,000 pre-revision.
And take a look at that dip in monthly jobs added in February 2019. February 2019 had been originally reported as a weak month for payroll gains, adding only 56,000 jobs. But revisions pulled it down to just 1,000 jobs added for the month. The longest continuous streak in job gains in American history just barely avoided being wiped out by revision.
For a look at the benchmark revisions across all industries, check out the chart below. Retail was revised down, making the 2018-9 stagnation look more like an outright contraction. Conversely, transportation & warehousing picked up additional job gains post-revision. The juxtaposition reinforces the e-commerce story as jobs shift from traditional retail into the logistics backbone that supports online retail.
Services, like professional & business services, education & health services, and leisure & hospitality, were also revised downward but growth still looks stable. Information (which includes tech) was revised up from weak performance.
To speak with Dr. Andrew Chamberlain or Daniel Zhao about today’s jobs report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @adchamberlain or @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.