The January BLS jobs report: What you need to know
The economy kicked off the new year—and a new decade—with robust economic growth. According to the latest release of the U.S. Bureau of Labor Statistics’ monthly jobs report, the labor market expanded by 225,000 jobs in January. Meanwhile, the unemployment rate increased slightly to 3.6% and average hourly earnings increased by 7 cents, totaling $28.44. Here are the headlines from January’s BLS jobs report.
New year, new jobs
According to the BLS report, 225,000 jobs were created in January, well above estimates of about 165,000. The most job growth was seen in construction, as MarketWatch says lower mortgage rates and greater demand for new housing spurred the addition of 44,000 jobs. Health care, transportation and warehousing, leisure and hospitality, and professional and business services experienced significant job gains as well. Revisions to the two previous job reports revealed there were 7,000 more jobs than originally reported. With these revisions, job gains have averaged 211,000 over the last three months.
The greater-than-expected number from the BLS may not come as such a surprise to those who took notice of payroll processor ADP’s report released earlier this week. The report revealed a 291,000 surge in employment within the private sector. Nearly doubling the expected gains, this was the best monthly gain reported by ADP since May 2015. “It’s juiced by very mild winter weather,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “The fingerprints of that are all over this report.”
Manufacturing affected by Boeing and coronavirus
According to the BLS report, the manufacturing sector cut about 12,000 jobs last month. While employment in manufacturing has been downhill for quite some time, new risks may shed some insight into these losses. According to the Wall Street Journal, “Boeing halted production of its troubled 737 MAX aircraft, an impediment to manufacturing output that is expected to reduce first quarter U.S. growth.” Meanwhile, the coronavirus outbreak that originated in China may have hindered manufacturing activity, especially in the automotive industry. The BLS report showed that the majority of the job losses in manufacturing occurred in motor vehicles and parts.
Signs point to job market plateau
For the first time in a decade, a survey of U.S. businesses revealed an even balance between companies adding and reducing staff. This not only marks the first unchanged reading in a decade, but is also the latest signal that the labor market is slowing. Of the 95 firms surveyed by the National Association for Business Economics (NABE), 18% reported that employment had risen over the past three months, while an equal share said it had fallen. According to the survey, the declines in employment were in services, goods-producing, transportation, utilities, information, and communication industries. Meanwhile, the gains were seen in finance, insurance, and real estate. These gains and losses jibe with the BLS’s Job Openings and Labor Turnover (JOLT) survey, released in January, which revealed hires and separations were little changed at 5.8 million and 5.6 million respectively.
As consumer confidence rises, more people look for jobs
Consumer confidence grew more than expected in January, thanks to job gains and a historically low unemployment rate. According to The Conference Board, consumer confidence index rose to 131.6 in January, up from 126.5 in December. The data also showed 49% of consumers think U.S. jobs are “plentiful,” up from 46.5%, while those saying jobs are “hard to get” decreased to 11.6% from 13%. “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020,” said Lynn Franco, senior director of economic indicators at The Conference Board.
This confidence was surely felt in January’s job report. While January typically is a notorious month for job search (according to the Monster 2019 Year-End Hiring Report, January was the most popular month for job searching), the BLS report showed that the share of Americans working or looking for work increased in January to 63.4% from 63.2% in December.
Unemployment Rate Metric is More Inclusive
For the first time ever, the BLS jobs report included men and women in same-sex marriages in the unemployment rates for married Americans. Prior to the January report, the BLS only included unemployment rates for men and women in opposite-sex marriages. January’s report showed a slight increase in unemployment for married men—from 1.6% to 1.7%—while unemployment for married women held at 2.1%. While these changes aren’t dramatic, it does reinforce the notion that married Americans are highly likely to hold jobs, as both of these figures are well below the overall unemployment rate of 3.6%.
Slowing Wage Growth Continues
Wages continued to increase, up 7 cents in January. Now totaling $28.44 in average hourly earnings, wage growth increased to 3.1% for the year, which is still below the post-recession peak of 3.5%. The previously mentioned NABE survey offered some clues as to the slowing wage growth, despite a consistently low unemployment rate. According to the survey, 44% said they are training internal staff for promotion, while 36% said they’re investing in labor-saving processes. Another possible theory is the correlation between slowing wage growth and declining weekly hours. According to the ADP report, average weekly hours for private sector employees have declined for nine straight months. Economists and employers alike will want to keep an eye on wage growth trends as 2020 continues.
The next jobs report will be released on March 6, 2020, at 8:30 a.m. EST. In the meantime, see how Monster can help drive job growth at your organization.