The job market got off to a roaring start in 2020, according to the January jobs report released today. The economy added 225K jobs last month, the second-highest monthly gain since last January.
Education and healthcare, construction, and transportation and warehousing see strongest job gains
Education and healthcare continued to show a remarkable capacity to add jobs, with 72K new jobs added.
The construction industry also added an impressive 44K jobs due to a recent pick-up in the housing market fueled by low interest rates, and thanks to warmer than usual weather in January. (In the household survey, only about half as many people as usual reported being prevented from working due to poor weather in January.)
Transportation and warehousing also added 28K jobs, in spite of recent declines in imports and exports that were expected to weigh on the sector.
Manufacturing and retail continue to struggle
In the meantime, the troubles in the manufacturing industry continued, amid slow economic growth abroad, the Trump Administration’s clampdown on businesses’ tariff exemption requests, and widening fallout from Boeing’s 737 Max crisis. That sector lost 12K jobs and saw weekly overtime hours continue to fall. Average overtime hours for manufacturing workers have now declined by more than half an hour per week since early 2018.
The retail apocalypse resumed its course with that sector shedding 8K jobs. E-commerce continues to disrupt retail, but is still creating more jobs in warehouses and trucking companies than are being lost in brick-and-mortar stores.
Participation continues to rise, especially among women
The most encouraging part of the report is the continued improvements in measures of labor force participation. The prime-age employment-population ratio popped again to 80.6%, the highest since mid-2001.
Both men and women saw gains, but female participation is rising faster (albeit from a lower starting point). Young women are making particularly impressive gains.
Wage growth ticks up, but hours worked remain low
Encouragingly, growth in average hourly wages rebounded to 3.1% in January after slowing from 3.4% in February 2019 to 2.9% in December 2019. But hours worked remain discouragingly low.
Over the past 9 years, average weekly hours worked have fluctuated within a relatively narrow band. But for four months now, we’ve been at the bottom end of the range, at 34.3 hours a week.
Hours worked are their lowest since 2011 in the business sector and manufacturing, and the lowest since the start of the series in 2006.
Why does that matter? Because the most frequent complaint we hear from workers is that they cannot get enough hours from their employers. Many workers are not being scheduled to work enough to make ends meet without taking on a second job.
The number of hours worked is also a leading indicator—an early warning sign of a possible future downturn. When the economy slows and businesses worry about future sales, the first thing they do is cut workers’ hours. The decline in overtime hours for manufacturing workers is a sign that manufacturers are worried. Coronavirus could add to their troubles in the coming months.