U.S. Jobs: December Dip Belies Good Year for Emplyoment Growth
I blush to confess I was on vacation over the holidays, and wrote last week's blog post for early submission before the New Year was upon us. That explains why I'm writing about last Friday's most recent Employment Situation Summary from our friends at the U.S. Bureau of Labor Statistics. It shows that job growth continues, though with December's 148,000 jobs added slowing down the pace somewhat.
With 2.1 million jobs added for 2017 overall, that number is 27,000 (or 15.4 percent) below the monthly average for that year of 175,000. Overall unemployment remains locked in at 4.1 percent, the lowest level since 2001. And indeed, labor economists are started to talk about slower job growth moving forward, at the same time they project rising wages, two factors that reflect the shrinking base of unemployed or underemployed workers available to occupy new jobs.'
With the Fed forecasting U.S. economic growth at 2.5 percent for 2018, and the Trump administration considerably more bullish in the 3-4 percent range, I sincerely hope that the dawning year augurs well for worker's paychecks both now and into the future. We'll see.
For the final month of 2017, job gains lifted multiple sectors. Health care grew by 31,000, with 15,000 of that in ambulatory health care services, and 12,000 of that in hospitals, and the remaining 4,000 in other healthcare niches. For 2016 vs. 2017, totals jobs added in this sector declined from 379,000 to 300,000. Construction added 30,000 jobs in December, with most of that increase for specialty trade contractors at 24,000. For 2016 vs. 2017, construction is up, with 155,000 jobs added in 2016 and 210,000 jobs in 2017.
Manufacturing also saw job growth that month, with a gain of 25,000. 2017 beats 2016 here hands down, with 196,000 manufacturing jobs for 2017 vs. a loss of 16,000 jobs in 2016. Food services added 25,000 jobs in December, where we saw 249,000 jobs for 2017 there were 276,000 such jobs in 2016. Professional and business services added 19,000 jobs for December. For this sector, 2016 vs. 2017 comes out at nearly equal for both years at 528,000 jobs or thereabouts.
Surprisingly, retail trade jobs declined by 20,000 for December, and edged down by 67,000 for all of 2017. That's better than the yearly decline of 203,000 for 2016, though. Most all other sectors, including our home sector, information, remain largely unchanged, both for the month and for this year and last. Overall wages, grew by 2.5 percent compared to 2016, up by $0.65 an hour for 2017 overall.
Here's how I read these particular tea leaves. Unemployment is down to a level where the balance is starting to shift to favor candidates over employers. At the same time, wage growth remains stubbornly slow and weak. According to CNN Money, the U.S. economy added 3 million jobs in 2015, 2.7 in 2015, 2.2 in 2016, and 2.1 in 2017.
The slope on that curve is negative and, as CNN Money puts it "that trend is what's expected in such a long economic expansion. As unemployment moves to historic lows, job gains eventually slow down." Combine a low supply of qualified job applicants for open positions, low unemployment overall, and a shrinking base of underemployed persons (down from 9.1 million in 2010 to 5 million in 2017) and you've got a pretty good indicator that wages must come up.
Let's hope that this happens sooner, rather than later, and that this riding tide is especially buoyant for those who toil in IT. Happy New Year, then, indeed!