These 3 Industries Are Carrying the Economy in 2019

April 30, 2019

On Friday, we’ll get the latest update on the U.S. job market from the federal government. After employers added a robust 196,000 new jobs to payrolls in March, what’s coming next for jobs and pay?

Here’s what we’ll be watching for in the April jobs report:

  • 121,000 new jobs added to payrolls;
  • Unemployment rate steady at 3.8 percent;
  • Average hourly wages up 3.2 percent; and
  • Labor force participation steady at 63.0 percent.

The job market is off to a banner start this year. Following December’s stock market losses, a federal shutdown in January, and rising signs of a slowing economy in February, the labor market rebounded with 196,000 jobs added in March — one of the factors helping fuel the S&P 500 to a new all-time closing high in April.

Although optimism on Wall Street is surging, signs in the data suggest caution. Hiring data from Glassdoor’s new Job Market Report point to an April slowdown in online job postings, with hiring flat from a year ago. As a result, we’re expecting to see around 121,000 new jobs added to payrolls in April — slightly below the 150,000 jobs predicted by a naive ARIMA model — and an unemployment rate that’s unchanged at 3.8 percent.

Three Sectors Driving Job Gains Today

While the economy’s fortunes have picked up this spring, not all sectors are moving the job market forward. Most job gains so far in 2019 have largely been carried by three booming sectors:  Health care, professional services, and leisure and hospitality. Job gains have been lackluster in most others. The economy has added 541,000 jobs so far this year and, of those, 372,000 or 69 percent have been in those three sectors.

Can the economy continue adding jobs this year? The answer to that question largely hinges on whether the health care, professional services, and leisure and hospitality sectors can remain healthy for the rest of 2019. Like Atlas carrying the world on his back, these three sectors of the economy are doing the heavy lifting in support of monthly job gains in this year’s BLS jobs reports.

Let’s have a closer look at these three sectors driving most job gains today.

Without question, the leading sector driving hiring today is health care. That sector has driven 30 percent of all job gains so far in 2019. Health care is a diverse landscape, ranging from hospitals to elderly care facilities. But unlike most sectors, nearly every area within health care is strongly adding jobs today.

Below we show the top areas in health care adding jobs in 2019. Hospitals led the way, adding more than 28,000 jobs alone. Home health care and residential nursing care facilities — both booming because of retiring Baby Boomers — added 22,500 and 12,700 new jobs, respectively. In terms of sheer size, health care is truly the Atlas of the U.S. labor market today. And when reading the tea leaves about the economy’s future, as goes health care so goes the broader job market in 2019.

Behind health care, the “knowledge worker” field of professional services has dominated hiring in recent years. In 2019, that sector alone has accounted for a whopping one-fifth of U.S. job gains. What areas in this diverse sector are driving those job gains?

As shown below, consulting (or “management and technical consulting services” according to BLS) is leading the pack with more than 20,000 jobs added since January. It is followed by the fast-growing tech sector (known to BLS as “computer systems design”) which has added 18,100 jobs — more than the entire manufacturing, mining and logging industries combined this year. Architecture and engineering services are booming as well, adding 17,900 jobs this year.

The third sector carrying the monthly jobs report this year is leisure and hospitality. One in every four jobs created in America this year has been in this sector. What’s behind those job gains?

One area dominates hiring in that field: Restaurants and bars. Food services and drinking establishments added an astounding 87,500 jobs so far in 2019, seven times more jobs than the much-discussed manufacturing sector.

However, unlike health and professional services jobs, these gains have mostly been lower-skilled roles in food services, many at or near the minimum wage. And although experts have predicted automation-related job losses in this sector due to growing self-checkouts and robotic kitchens, restaurant jobs are booming today and show little sign of slowing.

What jobs aren’t growing?

When predicting where the job market is headed for the remaining eight months of 2019, it’s helpful to keep in mind the three industries above dominating hiring today. But what industries today are not driving job gains and accordingly are less important drivers of hiring?

Three of the economy’s sectors have been volatile in 2019, or are adding few jobs: Construction; trade, transportation and utilities; and finance. Construction hiring has been flat since January. Trade and transportation shed jobs in both February and March. And financial services is only adding 6,000 to 11,000 jobs per month — a tiny overall share of the nation’s job gains.

Finally, three of the economy’s sectors have plummeted so far this year, showing miserable job gains: Manufacturing; mining and logging; and information (which contains most traditional media companies). Manufacturing lost -6,000 jobs in March alone, and has added just 12,000 jobs for the year. Mining and logging has added a paltry 5,000 jobs. And the beleaguered information industry has consistently shed jobs this year, losing -6,000 jobs since January.

When thinking about the future of work in America, it’s important to remember a small number of sectors are driving job creation forward in 2019. Health care, professional services, and hospitality are the engines propelling the economy forward today. Those are sectors analysts will be watching closely for any sign of a broader pullback in hiring later this year.

To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.