U.S. Job Market Running Out of Steam? It Depends

On Friday, we’ll get the latest update on the U.S. job market from the federal government. After a decidedly weak February in which employers added a paltry 20,000 new jobs to payrolls, what’s next for jobs and pay?

Here’s what our economists will be watching for in the March jobs report:

  • 142,000 new jobs added to payrolls in March;
  • Unemployment rate steady at 3.8 percent;
  • Average hourly wages up 3.1 percent;
  • Labor force participation down 0.1 percent to 63.1 percent.

Conventional wisdom is that the labor market is in solid shape. And there is a lot of wisdom in that assessment: The economy has added a robust 209,000 jobs per month on average over the past year, unemployment is at a 20-year low rate of 3.8 percent, and wages rose a healthy 3.4 percent last month.

However, after job gains fell alarmingly short of economists’ expectations last month—with employers adding just 20,000 new jobs—more analysts are asking: are there cracks starting to show in today’s economy?

There are plenty of reasons for analysts to wring their hands and worry about the nation’s economy. As we’ve noted before, investors just experienced the worst December for stock markets since the Great Depression, the longest-ever government shutdown in January and rising geopolitical uncertainty around trade with China in February. Combine that with lower GDP growth forecasts for 2019, a tax stimulus whose effects are fading, a recent inversion of the closely-watched yield curve, and Fed policymakers citing signs of a slowing economy and there are plenty of reasons to be concerned.

Do we see any signs of a slowdown in Glassdoor’s real-time job market data? Overall, the job market is in good shape. Hiring remains strong across the country, with nearly 6.5 million unique U.S. job postings open on Glassdoor as of March 25. That’s enough open jobs to hire every unemployed American today—there were 6.2 million unemployed workers in February—with more than 300,000 open jobs left to spare. And although pay growth was off to a slow start in 2019, our Local Pay Reports show salary gains resumed their upward march last month.

However, beneath the overall average there are reasons to be concerned. Hiring on Glassdoor is clearly off to a slower-than-usual start in 2019, a potentially worrisome trend that’s worth watching in the coming months.

Online job postings usually rise rapidly in January, February and March in the wake of the holiday season, when employers return to hiring after holiday vacations. However, this year job postings on Glassdoor have been essentially flat, possibly an early sign of jobs reports to come.

In the figure below, we show growth in online job postings during the first three months of the year over the past several years. There usually is a drop in job postings in December, as employers put hiring on hold for the holidays, followed by a surge in the new year. Job postings on Glassdoor typically grow 5 to 15 percent from January to March.

By contrast, job postings are up less than one percent so far in 2019—0.9 percent growth. For comparison, job postings were up a robust 13.2 percent during the same period last year, and up 4.7 percent and 14.6 percent in 2017 and 2016, respectively.

What’s causing the slowdown in online job postings? One way of tackling that question is to look at which industries are pulling down the trend. The table below shows online job trends for a few of the largest sectors that dominate hiring on Glassdoor today. If there’s really a slowdown in hiring, we should see it in these sectors.

Since January, there have been notable declines in job postings in health care (-4.0 percent), financial services (-4.9 percent), retail (-2.6 percent), and restaurants and food services (-2.7 percent). Those drops have helped pull down overall job postings this year. By contrast, hiring is relatively strong in business and professional services (+3.1 percent)—although still well below gains typical in most years—while manufacturing postings have been essentially flat (+0.1 percent).

Growth in Online Job Postings on Glassdoor by Sector, January – March 2019

January March % Change
Health Care 1,012,236 971,697 -4.0%
Retail 787,223 766,731 -2.6%
Business and Professional Services 722,245 744,587 3.1%
Restaurants and Food Services 521,219 507,172 -2.7%
Manufacturing 264,567 264,907 0.1%
Financial Services 153,120 145,555 -4.9%

Source: Glassdoor Economic Research (www.glassdoor.com/research/)

So is the job market really slowing? For now, it’s probably too early to make broad conclusions. Based on trends we’re seeing on Glassdoor, the economy seems to be flashing a yellow warning light—but not a red emergency light as of March. We’re expecting to see moderate job gains in Friday’s BLS report, with little movement in the unemployment rate or wage growth.

As of the end of March, the economy will have been in an expansion for an astounding 117 months. That’s just three months short of the all-time record for longest U.S. expansion of 120 months, set in the 1990s. If the job market can march forward through the end of June, we’ll be in uncharted territory in terms of the length of time the American economy has gone without a recession. We’ll be eyeing the numbers closely as we approach that historic economic milestone.

To speak with Dr. Andrew Chamberlain or Daniel Zhao 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 and @danielbzhao.