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What to Expect From the December Jobs Report: Live Updates U.S. Added 145,000 Jobs in December; Unemployment at 3.5%
(32 minutes later)
The Labor Department will release initial hiring and unemployment figures for the last month of 2019 on Friday. Here’s what to watch for: ■ 145,000 jobs were added in December. Analysts had expected a gain of about 160,000.
Wall Street analysts expect a falloff from the previous month’s buoyant showing, with payroll gains of roughly 160,000, down from the 266,000 initially reported for November. ■ The unemployment rate was 3.5 percent.
The unemployment rate is expected to be unchanged at 3.5 percent. ■ Average hourly earnings rose by 0.1 percent. The year-over-year gain is now 2.9 percent.
Average hourly earnings are predicted to rise by 0.3 percent, after moving up 0.2 percent in November. That would bring the year-over-year increase to 3 percent. Hiring for the final month of 2019 capped a year of steady but slowing gains in employment, the latest evidence that the American labor market has not yet run out of breath.
Analysts are paying particularly close attention to Friday’s release, and not just because it will begin to close the books on 2019. Sluggish growth and uncertainty abroad, combined with a maturing labor market at home, contributed to slimmer payroll gains last year, said Gregory Daco, the chief United States economist at Oxford Economics.
Figures from the previous two months were clouded somewhat by a six-week strike by 49,000 General Motors workers. And although the report won’t alter last year’s overall employment picture, December’s reading will help explain whether November’s unusually exuberant gains were a one-off or the start of a trend. But cooling job creation is to be expected in the 11th year of an economic expansion, and as the government’s report, released Friday, showed, the slowdown has been gradual.
“The big story of 2019 was the slowdown from 2018” in payroll growth, said Nick Bunker, an economist at the jobs site Indeed. “I just want to see whether we’re going to head into 2020 with a bit more momentum.” The Labor Department’s preliminary estimate of December’s performance does not alter last year’s overall employment picture.
The government reported this week that the number of new people filing for unemployment benefits dipped, a figure that remains at historically low levels. Nonetheless, Andy Challenger, vice president of Challenger, Gray & Christmas, an outplacement firm that tracks layoff announcements, said that “overall the job cuts we saw in 2019 were fairly high, higher than you would expect.” “I think 2019 was a year of consolidation,” Mr. Daco said. “We had relatively strong and steady job growth over the year despite a number of headwinds including a trade war with China, weaker global activity and heightened policy uncertainty.”
Industrial goods and automobile manufacturers were among the hardest hit. Such uncertainty — which nudges businesses to be more cautious in hiring and investment — is far from clearing.
A weakening manufacturing sector was a persistent concern throughout last year. “Uncertainty around trade has been a serious complication,” Mr. Challenger said. “It’s hard for these manufacturers to make decisions around long-term planning when they don’t know what their cost structure is going to be. And there’s still changes to come.” There has been progress on the trade front — the United States and China have reached the first phase of an agreement that officials are expected to sign next week. But two-thirds of Chinese imports — worth $360 billion — are still subject to tariffs. And President Trump has said he would impose more tariffs on imports from Europe this month.
There has been progress on the trade front — the United States and China have reached the first phase of an agreement that officials are scheduled to sign next week. But two-thirds of Chinese imports worth $360 billion are still subject to tariffs. And President Trump has said he will impose more tariffs, on imports from Europe, this month. More unexpectedly, global markets were briefly rattled in recent days by fears of a broader violent clash between the United States and Iran after the president’s decision to kill a top Iranian general. Iran struck American air bases in Iraq in retaliation this week, but the attack is said to have resulted in no casualties and tensions have eased.
“It will be interesting to see how manufacturing ended the year,” a sector that is particularly important to President Trump and his voter base, said Rubeela Farooqi, chief United States economist for High Frequency Economics. “Especially in an election year, the trajectory is going to be important.” The labor market, by contrast, has provided some calm. Despite the occasional swoop in payroll gains, the official unemployment rate has remained at half-century lows. Americans who had been outside the work force have decided to join in, and average monthly job gains still handily outpace population growth.
The labor squeeze has helped workers at the lowest end of the pay scale, pushing wage increases above the overall average. Nonetheless, spiritless wage growth has been one of the more disappointing story lines of 2019. “I didn’t see much wrong with the labor market in 2019,” said Rubeela Farooqi, chief United States economist at High Frequency Economics.
“We saw an acceleration of wage growth in 2018, but then it stalled out in 2019,” Mr. Bunker of Indeed said. “Average wage growth was fairly tepid.” Roughly two million jobs were created last year, but that total can mask wide differences based on location, skills and industry.
Average year-over-year raises in 2019 have so far failed to match the 3.4 percent peak reached in February. Many retail jobs have disappeared, for example, while health care, transportation and logistics, and professional and business services have flourished.
The slowdown is puzzling considering that the jobless rate has been below 4 percent for nearly two years. Employers routinely lament their inability to find workers at the wages they are offering. Finding qualified workers was the top complaint for small-business owners in December, according to a monthly survey from the National Federation of Independent Business. Construction, mining and manufacturing, industries that tend to be more affected by the global economy, have also noticeably slumped.
Robert Herman owns a mobile pet grooming franchise in Charleston, S.C., where the jobless rate was 1.8 percent in November. This year Mr. Herman said he planned to add a fifth van to his fleet of moving dog and cat salons and hire two more employees. Between commission and tips, he said his workers average $20 to $25 an hour. Even so, there are pockets in these goods-producing sectors that are doing well, like those related to electrical vehicles and charging docks, said Julia Pollak, a labor economist for the employment site ZipRecruiter.
The low overall unemployment rate may be overstating the strength of the labor market, said Elise Gould, an economist at the left-leaning Economic Policy Institute, pointing to slow wage growth. “Manufacturing is not dead but its location will shift,” she said, noting new plants do not necessarily replace closed ones.
This year, minimum wage increases could help to further pull up paychecks at the bottom. Raises either went into effect this month or are scheduled for later in the year in 21 states and 26 cities and counties. There has been little sign that this weakness has spread to the much larger service sector.
The Labor Department’s report is based on two monthly surveys, one of employers and the other of households. Economists are continually updating their results, and Friday’s report takes account of some very minor adjustments. Ms. Pollak pointed to other patterns: “The highest job growth and wage growth have been in nine states.”
Much more prominent revisions, though, are scheduled to be released next month, when the government publishes its annual update of payroll gains. We already know that this adjustment will be a doozy. Preliminary data released over the summer indicated that job growth through last spring was weaker by about 500,000 jobs than initial estimates. That will change some year-to-year comparisons. Among the top four, Utah, Nevada, Arizona and Colorado, the expansion has been driven by the technology industry. Those states have benefited in part because they have lower housing costs than Silicon Valley, Ms. Pollak said.
If you want to know more about how the jobs report is put together, this story explains it all. And if you want to know why we think the numbers are trustworthy, this Twitter thread by my colleague Ben Casselman lays out the arguments. Their less congested roads and airspace are also a draw, especially for companies that are building and testing technologies like drones and driverless cars, she added.
And remember, the monthly report provides just a single snapshot of the labor market and by extension, the American economy. The overall trend is more important than any individual report. Even companies based in California — still a powerhouse of job creation — are locating their customer service and call centers in these nearby states.
On the West Coast, Washington is also notching strong gains, Ms. Pollak said, while in the South, Florida, Alabama and South Carolina have managed to combine job and wage gains.
“Yes, I do plan on hiring,” said Robert Herman, who owns a mobile pet grooming franchise in Charleston, S.C., where the jobless rate was 1.8 percent in November. “We’re doing great.”
This year, he said he planned to add a fifth van to his fleet of moving dog and cat salons and hire two more employees. Between commission and tips, he said his workers earned an average of $20 to $25 an hour.
The labor squeeze has helped workers at the lowest end of the pay scale, pushing wage increases above the overall average. Minimum wage increases in 21 states and 26 cities and counties that either went into effect this month or are scheduled for later this year could help to further pull up paychecks at the bottom.
Yet, in 2019, spiritless wage growth has been one of the more disappointing story lines.
“We saw an acceleration of wage growth in 2018, but then it stalled out in 2019,” said Nick Bunker, an economist at the job site Indeed. “Average wage growth was fairly tepid.”
Year-over-year wage gains in 2019 have so far failed to match the 3.4 percent peak reached in February.
The slowdown is puzzling considering that the jobless rate has been below 4 percent for nearly two years. Employers routinely lament their inability to find workers at the wages they are offering. Finding qualified workers was the top complaint for small-business owners in December, according to a monthly survey by the National Federation of Independent Business.
Consumer confidence continues to float at high levels, but businesses have kept wages low because many owners say they fear that higher prices would chase away customers.
The proportion of the population that is working is below pre-recession levels, but the flow of more Americans into the job market may also be damping wages. About three-fourths of new hires were not even looking for work the previous month.
“It’s been slowing over the last several months,” Elise Gould, an economist at the Economic Policy Institute, a liberal research organization in Washington, said of wage growth.
“We haven’t really seen any changes in the labor market that would explain that,” she said. “Lots of businesses are showing profits, but we’re not seeing the kind of capital investments that we’d thought we’d see.”
The Labor Department also reported this week a dip in the number of new people filing for unemployment, a figure that remains at historically low levels. Nonetheless, “over all, the job cuts that we saw in 2019 were fairly high, higher than you would expect,” said Andy Challenger, a vice president at Challenger, Gray & Christmas, an outplacement firm that tracks layoff announcements.
Industrial goods and automobile manufacturers were the hardest hit, in part because of the trade war. “As rosy as the numbers look from a high level, there’s still pain out there, jobs cuts that are happening, industries that are struggling and people losing their jobs,” Mr. Challenger said.
Because the company’s survey tracks layoff announcements — as opposed to jobs that have been eliminated — he said that it was “a bit more forward-looking” than the Labor Department’s figures. Plans can change, he noted, but the results “point to sentiments, if they think they’re going to cut.”
The department’s monthly report is based on two surveys, one of employers and the other of households. Economists there are continually updating their results, and Friday’s report takes account of some very minor adjustments.
Much more substantial revisions are scheduled to be released next month, when the government publishes its annual update of payrolls gains. Preliminary data released over the summer indicated that job growth through last spring was weaker by about 500,000 jobs than initial estimates. That will change some year-to-year comparisons.