The February employment figures from the Bureau of Labor Statistics, released on Friday, depict a strong labor market, with the US economy adding 313,000 jobs: the largest monthly increase since July 2016 and extending the longest recorded labor market expansion in US history into its 89th month. Job growth figures were also revised upward for December and January by a total of 54,000. The unemployment rate held steady for the fifth month straight at 4.1 percent, the lowest rate since December 2000.
Economists had expected growth of around 200,000 jobs. Some observers attribute the spike in hiring to the massive corporate tax cut passed by Congress in December, but this is not a consensus view, the Washington Post reports:
“This is a result of fiscal stimulus — in other words: a $1.3 billion tax cut,” [Glassdoor chief economist Andrew Chamberlain] said. “Businesses are making decisions on a forward-looking basis. Even if the dollars aren’t in the pockets of companies yet, they’re making plans.”
Cathy Barrera, head economist at ZipRecuiter, an employment site, questioned that interpretation, asserting it’s still too early to see an impact from the tax measure. “Really for businesses, what matters is demand for their products,” she said. “If demand for products hasn’t gone up, there’s not more work for these companies to be doing.”
The only piece of not-so-great news in Friday’s jobs report was that February did not deliver the acceleration in wage growth that many economists were hoping for. Average hourly earnings for private nonfarm employees rose by 4 cents to $26.75, for a year-over-year figure of 2.6 percent, lower than the 2.9 percent figure reported for January (revised downward in this month’s report to 2.8 percent).
The combination of large job growth and low wage growth was reassuring news for Wall Street, the New York Times adds, as it points to continued economic expansion but eases fears of runaway inflation:
Facing a shortage of talent and a surplus of unfilled jobs, the state of Wisconsin is pulling out all the stops to attract millennials from other parts of the midwestern US to the state to work, Shayndi Rice reports at the Wall Street Journal. In January, the Wisconsin Economic Development Corporation launched a $1 million ad campaign in Chicago, while the state legislature is soon expected to pass a proposal from Governor Scott Walker to spend another $6.8 million to advertise the state throughout the midwest.
Too many jobs and not enough workers may sound like a luxury problem compared to what some parts of the US have reckoned with in the past decade, but Wisconsin policy makers fear that the slow growth of the labor force (just 1.4 percent from 2010 to 2016) could hinder economic development in the state. That low growth—a product of demographic aging, low birth rates, and negative net migration—has left Wisconsin with an unemployment rate of 3 percent and a projected 45,000 unfilled jobs by 2024, Rice reports.
Along with the abundance of job opportunities, the ad campaigns tout the low cost of living in Wisconsin cities (compared to Chicago), easier commutes and higher quality of life. Cities like Milwaukee and Madison are also running social media campaigns to advertise themselves as fun, vibrant places for young professionals to live. Critics of the campaigns, however, contend that these funds would be better spent on public services.
The January jobs report from the US Bureau of Labor Statistics showed that average hourly wages had risen 2.9 percent over the preceding year. Though not quite the 3.5 or 4 percent growth economists would like to see, that figure represents an encouraging sign that the American labor market’s perplexing combination of low unemployment and stagnant wages might finally be abating.
A new analysis from Reuters expands on the good news, finding that last year’s wage gains were geographically broad, not concentrated in a small number of states or cities. Ann Saphir, Jonathan Spicer, and Howard Schneider report:
The Reuters analysis of the most recent data available found that in half of the 50 states, average hourly pay rose by more than 3 percent last year. That’s up from 17 states in 2016, 12 in 2015, and 3 in 2014. Average weekly pay rose in 30 states, also up sharply from prior years, the analysis showed. Unemployment rates are near or at record lows in 17 states, including New York, up from just five in 2016, the Reuters analysis shows. …
Total nonfarm employment in the US grew by 200,000 jobs last month, while the unemployment rate held steady at a historically low 4.1 percent, according to January’s employment numbers from the Bureau of Labor Statistics. The highlight of last month’s jobs data, however, was the increase in average hourly earnings, which rose by nine cents to $26.74, following an 11-cent gain in December. Over the past year, average earnings increased by 75 cents or 2.9 percent. That’s the largest year-on-year gain since June 2009, Reuters reports, though the average workweek fell slightly in January to 34.3 hours, canceling out some of these wage gains.
Reuters adds that the strong jobs data increase the likelihood that the Federal Reserve will raise its benchmark interest rate several times this year, perhaps more than the three hikes it was already planning:
“This report supports the Fed’s contention that the jobs market is nearing full capacity and wage and inflation pressure has begun to make its way into the data,” said Marvin Loh, senior global market strategist at BNY Mellon in Boston. “With almost full odds priced in for a March rate hike, investors have moved towards the second, third, or even possible fourth rate hike this year.”
A separate set of Labor Department figures released earlier in the week found that total US employee compensation costs increased by 2.8 percent across 2017, Bloomberg reported, with several industries, including transportation and service occupations. showing increases of over 3 percent—a sign of a competitive labor market.
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US employers added 148,000 jobs in December for a total increase of 2.1 million jobs across last year, according to the latest employment data released by the Bureau of Labor Statistics on Friday. The monthly figure, while still reflecting a strong labor market, was considerably lower than the revised totals of 252,000 and 211,000 jobs added in November and October, respectively. Figures for these months were revised downward by a total of 9,000 in Friday’s BLS report. The annual increase was slightly below the 2.2 million jobs added in 2016. The greatest job gains last year came in the health care, construction, food service, and manufacturing sectors, whereas retail employment declined by 67,000.
The unemployment rate held steady at 4.1 percent, remaining at its lowest level since December 2000 for the third month running. The total number of Americans employed part-time who would prefer full-time work was “essentially unchanged” at 4.9 million in December but down 639,000 for 2017, while the number of long-term unemployed fell by 354,000 over the course of the year to 1.5 million last month. Average hourly earnings rose by 65 cents, or 2.5 percent, over the year.
Economists’ views of what this portends for the coming year differ, based partly on how much impact they think the household and corporate tax cuts passed by Congress last month will have on hiring and consumer spending. “The pace of job creation in 2017 suggests the expansion may have more room to run eight and a half years after the most recent recession ended,” the Wall Street Journal’s Eric Morath writes, while the tax cuts could “turbocharge growth,” as Joseph Brusuelas, chief economist at consulting firm RSM US, puts it. Glassdoor’s chief economist Andrew Chamberlain takes a different view:
The US economy added 228,000 jobs in the month of November, outperforming economists’ expectations, while the unemployment rate remained at 4.1 percent, its lowest since 2000, according to the latest figures from the Department of Labor. Average earnings rose by five cents an hour, resulting in a total increase of 64 cents, or 2.5 percent, in the past year.
The jobs report reflects the continued strength of the American economy, with wage growth finally starting to pick up after a years-long period of stagnation despite of a historically tight labor market. It also shows that the mainland US has rebounded strongly from the major hurricanes that did extensive damage to Florida and Texas in September. The small job loss reported that month was later upward to a small gain, meaning the US has added jobs for 86 consecutive months. The monthly figures do not cover the territories of Puerto Rico and the US Virgin Islands, however, which were devastated by Hurricane Maria and are still struggling to rebuild.
The problem remains that the tightness of the labor market isn’t translating into real earnings growth for US workers, as most economic models predict it should. With talent in short supply, employers are under pressure to raise wages, the New York Times reports, and the slower-than-expected wage growth over the past year may reflect businesses being unable to afford the wages candidates are demanding:
Most economists expect wage growth to pick up as the unemployment rate falls. Other measures of earnings have already shown modestly faster gains, and there are signs that businesses are feeling pressure to raise pay. For the first time in six years, chief executives surveyed by the Business Roundtable, a coalition of big corporations, reported that labor expenses were their biggest cost pressure in the fourth quarter.
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After a September jobs report marred by the impact of Hurricanes Harvey and Irma, October’s monthly data from the Bureau of Labor Statistics shows the US labor market rapidly rebounding from these disasters, with non-farm employment rising by a seasonally adjusted 261,000 last month. Although this did not meet economists’ expectations of 315,000 new jobs, it was a huge improvement from September. Figures for that month were also revised upward from 33,000 jobs lost to 18,000 jobs gained, meaning the US remains on a record 85-month job growth streak.
Unemployment fell to 4.1 percent, its lowest level since December 2000, but wage growth was stagnant at 2.4 percent year-over-year, a slowdown over the previous month. “With the swings from the hurricanes now largely behind us, the longer-term challenge of wage growth returns to the foreground,” Jed Kolko, chief economist at Indeed, commented to the Wall Street Journal.
The labor force participation rate also fell by 0.4 percentage points in October, to 62.7 percent, which suggests that even as the economy approaches nominally full employment, there remain many Americans who are neither working nor looking for work. Accordingly, re-engaging those labor force dropouts could become an increasingly important strategy for US organizations that want to expand their workforces in the current labor market.
“The bigger picture here is that the labor market’s fine,” Brett Ryan, an economist at Deutsche Bank, explains to the New York Times. Fine, however, is not necessarily great, as the labor force participation and wage figures suggest: