U.S. Job Gains and Wage Growth Moderate, Hiring Outlook Softens

January 10, 2020

Employers added 145,000 jobs in December as the unemployment rate remained at 3.5% while average weekly earnings for all employees increased 2.3% year-over-year, slightly above the 2.0% inflation rate.

The latest three-month average of job gains fell slightly to 184,000, below the monthly average gains for 2018 (223,000) but above that of 2019 (176,000).

Wage gains have moderated over the past nine months, with average weekly earnings rising 2.3% over the past year—down from 3.2% in March 2019, and average hourly earnings rising 2.9%—down from 3.4% in February 2019.

The broadest measure of labor underutilization fell to a record low 6.7% in December.  This measure includes the number of workers employed part-time for economic reasons and Americans who’ve given up looking for work (discouraged workers).

Manufacturing jobs decreased by 12,000 in December, but are up slightly over the past year (+46,000) despite trade tensions and relatively weak global growth.

Just five industries accounted for 96% of the December job growth:

  • Retail (+41,200);
  • Leisure and hospitality (+40,000);
  • Health care (+28,100);
  • Construction (+20,000); and
  • Professional and business services (+10,000).

Most other industries were little changed, with the exceptions of manufacturing (-12,000), transportation and warehousing (-10,400), and mining and logging (-9,000).

Looking ahead:  According to the ManpowerGroup employment outlook for the first quarter of 2020, just 22% of U.S. employers expect to add to payrolls while 72% are expecting no change.  Globally, the strongest labor markets are anticipated in Greece, Japan, Taiwan, the U.S. and Romania, while the weakest hiring activity is expected in Panama, Argentina, Costa Rica, Italy, and Spain.