US Job Market Finishes 2018 Strong, but Talent Challenges Remain

US Job Market Finishes 2018 Strong, but Talent Challenges Remain

The US jobs numbers for December, released by the Bureau of Labor Statistics on Friday, exceeded expectations by a wide margin with the economy adding 312,000 jobs last month, while figures from October and November were revised upward by a combined total of 58,000. It was the best month of job growth since February 2018, when 324,000 jobs were created. Economists surveyed by Dow Jones had forecast just around 176,000 new jobs, according to CNBC.

The unemployment rate increased slightly from 3.7 to 3.9 percent in December, but for a good reason: not because workers lost their jobs, but rather because 419,000 new job seekers entered the labor force. The unemployment rate has fallen from 4.1 percent since December 2017, while the workforce expanded by nearly 2.6 million people. With the final report for the year, the US added an average of 220,000 jobs a month in 2018. Wages also grew in December by 0.4 percent over the previous month and 3.2 percent over the previous year, tying with October for the best year-over-year increase since April 2009 and indicating that the tight labor market is finally leading to higher pay for US employees.

“It appears that higher wages are the reason why people are returning to the active labor force in large numbers,” Paul Ashworth, chief US Economist with Capital Economics, commented to CNN, adding that wage growth might spook investors by suggesting that the Federal Reserve would proceed with its planned schedule of interest rate hikes this year. Ashworth added in a note reported by CNBC that the big jump in jobs “would seem to make a mockery of market fears of an impending recession,” while Jim Baird, chief investment officer for Plante Moran Financial Advisors, told the network: “Employers, it would seem, didn’t get the memo from Mr. Market that it’s time to tighten their belts.”

Nonetheless, the robust jobs report comes amid market jitters over the possibility of an overheated economy, missed earnings projections from some major US companies, and concerns about the domestic impact of President Donald Trump’s trade policies toward China. In remarks after the report was released on Friday, Fed Chairman Jerome Powell said the central bank was prepared to adjust monetary policy in response to changing economic conditions, meaning it could ease up on raising interest rates if the economy shows signs of trouble. Powell described the jobs report as encouraging, saying the rise in wages “does not raise concerns about too-high inflation” and would not prompt the Fed to accelerate rate increases, the New York Times reported.

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US Hiring Slows and Unemployment Ticks Upward in August’s Jobs Report

US Hiring Slows and Unemployment Ticks Upward in August’s Jobs Report

The US labor market continues to grow, but hiring slowed slightly in August, with employers adding 156,000 new jobs and the unemployment rate increasing slightly from 4.3 to 4.4 percent, according to the Labor Department’s monthly jobs report. The Associated Press examines the numbers:

Job growth in June and July was revised down by a combined 41,000, leaving an average monthly gain this year of a solid 176,000. Taken as a whole, Friday’s jobs report pointed to an economy that is still steadily generating jobs, though at a slower pace than it did earlier in the recovery from the recession. With fewer people looking for work, fewer jobs are being filled.

One persistent soft spot in the job market is that pay raises remain tepid. Average hourly pay rose just 2.5 percent over the 12 months that ended in August. Wage growth typically averages 3.5 percent to 4 percent annually when unemployment is this low. … Overall, hiring this year has averaged 176,000 a month, roughly in line with 2016’s average of 187,000. August was the 83rd straight month of job gains.

The report does not account for the economic impact of Hurricane Harvey, which came too late in the month to be reflected in the Labor Department’s surveys. Economists tell the AP the effects of the disaster will likely be visible in the months to come, with job growth first weakening and then rebounding as workers who were temporarily laid off are rehired.

Overall, August’s job numbers undershot economists’ expectations, CNBC’s Jeff Cox reports, but not enough to cause concern:

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Report: Lower Immigration Won’t Save UK Workers From Negative Wage Effects of Brexit

Report: Lower Immigration Won’t Save UK Workers From Negative Wage Effects of Brexit

One of the arguments advocates of Brexit made for pulling the UK out of the European Union was that it would raise wages and improve employment prospects for native Britons with lower levels of skill or education, by reducing the number of European immigrant workers competing for low-level jobs. In reality, the effects of the divorce on the British workforce were always bound to be more complicated. The UK’s agricultural producers, for instance, have long depended on a seasonal migrant labor because they can’t find enough local employees willing to do the physically demanding work of harvesting crops, and rather than creating more farm jobs for UK citizens, Brexit instead looks likely to result in labor shortages in that sector.

As for raising wages, a study issued last month by the Resolution Foundation indicated that the inflationary effects of Brexit would reduce real wages and cancel out some of the benefits low-level employees would enjoy from the recently-enacted National Living Wage law. A new report from the same organization looks at the economic impact of a decrease in immigration along the lines of what Brexit proponents are hoping for, and as the CIPD’s Peter Crush explains, the news is not good for low-wage earners:

Any rise in wages for Britain’s lowest-paid workers following the vote to leave the EU will be dwarfed by the broader economic damage wreaked by Brexit, according to a report by the Resolution Foundation. The think tank modelled a scenario in which migration was brought down to 99,000 before 2018 – slightly below the government’s target of 100,000, and in line with the expectation of many Leave campaigners.

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UK Survey: Living Wage Not a Big Job Killer, But Post-Brexit Inflation May Undermine It

UK Survey: Living Wage Not a Big Job Killer, But Post-Brexit Inflation May Undermine It

A new survey from the Resolution Foundation finds that the UK’s National Living Wage law, which went into effect at the start of April, hasn’t hurt employers or affected the job market as dramatically as its critics had predicted, Jo Faragher reports at Personnel Today:

The thinktank’s survey of 500 employers, carried out before the EU referendum, found that only 6% felt the arrival of the new national minimum rate of £7.20 had had a large effect. Just over one-third (35%) reported a rise in their wage bill, but have responded by pushing up prices or taking lower profits. Of those organisations where payroll increased, 21% said this was by a small extent, 8% to some extent and 6% to a large extent. …

The survey found that – contrary to many predictions before the national living wage was introduced – only 8% of employers have scaled back other aspects of their reward packages, and only 8% hired more workers aged under 25 (the rate only applies to those aged 25 and over). The Resolution Foundation does point out, however, that the recent vote to leave the European Union could have an impact on inflation and therefore on how far the national living wage will stretch, even taking into account the planned incremental rises between now and 2020.

The CIPD’s Vicki Armstein goes into more detail about the potential inflationary effects of Brexit and what they might mean for the minimum wage:

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