US Labor Market Continues Strong Growth in 2020
The US added 225,000 jobs in January
The United States labor market continues to show strength, with 225,000 jobs added in January. This is much higher than the consensus forecast of 160,000 for the month. The unemployment rate rose slightly, from 3.5 percent to 3.6 percent. This increase, coupled with an expansion in the labor force participation rate from 63.2 percent to 63.4 percent shows that employers continue to pull more people off the sidelines and into the job market. Wage growth also accelerated, from 2.9 percent in December to 3.1 percent in January.
Top Takeaways from the Report
Job Growth in January was Much Higher Than Expected
Job growth greatly exceeded expectations in January. The consensus forecast for job growth was 160,000. The actual number of 225,000 showed the economy is still growing at a good clip. While this number is down from 312,000 monthly jobs added a year ago, it is well above the 2019 average of 176,000.
Labor Market Indicators Show Strength
While unemployment ticked up to 3.6 percent from 3.5 percent in December, the labor force participation rate improved to the highest rate since 2013 at 63.4 percent. Underemployment remained below 7 percent, clocking in at 6.9 percent. An increase in both the unemployment rate and the labor force participation rate is sign that more people are moving off the sidelines and into the labor market.
Wage Growth Continues Upward Trend
Despite causing some concern in December when it slowed to 2.9 percent, wage growth remained strong in January, growing 3.1 percent year-over-year. Wage growth has now exceeded 3 percent growth year-over-year for 17 of the last 18 months.
Growth by Industry
Construction employment growth experienced the highest growth in January, adding 44,000 jobs. The January number represents a drastic increase from an average of 12,000 jobs added per month in 2019.
The education and health services sector also experienced strong growth in January, adding 36,000 jobs. Ambulatory healthcare services contributed the most to the sector, adding 23,000 new jobs.
Although the number of jobs in the mining and natural resources sector remained unchanged in January, jobs in the industry have declined 4.4 percent over the last year. This was the only major industry to lose jobs year-over-year.
The manufacturing industry continued to shed positions, with employment in the industry decreasing by 12,000 jobs in January. Although January was the second month in a row with manufacturing job losses, manufacturing still added jobs year-over-year.
The Bottom Line
The labor market continues to be one of the bright spots in the US economy. The easing of tensions around the USMCA, Brexit, and the trade war with China is providing strength to the economy. While there are some concerns about the potential negative economic impact of the Coronavirus, this report provides a sign of strength in the economy for 2020.
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