Solid Job and Wage Gains Continue as Job Openings Soften

February 07, 2020

The addition of 225,000 jobs in December and a 3.3% year-over-year increase of average hourly earnings for production and nonsupervisory employees was countered by the number of job openings weakening at a pace not seen since just before the last recession.

The latest three-month average of job gains rose to 211,000, above the monthly average gains for 2018 (193,000) and 2019 (175,000).

While the unemployment rate ticked up to 3.6%, it has remained at historically low levels over the past year.

Wage gains have moderated over the past year but continue to increase faster than inflation.  Average weekly earnings for all employees rose 2.5% over the past year—down from 3.4% in March 2019.  Average hourly earnings for all employees rose 3.1%—down from 3.5% in August 2019.

Manufacturing jobs decreased by 12,000 in January, and are essentially unchanged over the past year (+26,000) as trade tensions and relatively weak global growth have hampered jobs growth.

Six industries accounted for nearly all of the January job growth:

  • Construction (+44,000);
  • Federal and local government (+39,000);
  • Leisure and hospitality (+36,000);
  • Health care (+35,500);
  • Transportation and warehousing (+28,300); and
  • Education services (+24,900).

Most other industries saw little change, with the exceptions of state government (-13,000), manufacturing (-12,000), and retail trade (-8,300).

Looking ahead:  Although the labor market remains strong, the number of job openings has dropped by 825,000 since March 2019, the first relatively steady drop since 2007.  Should job openings weaken further, it could signal a recession beginning sometime in 2021.