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.

The report does not reflect the impact of the ongoing government shutdown, which led to 380,000 federal workers being furloughed in late December, as the data were collected before the shutdown began, CNN added. These furloughs could affect the BLS’s January report if the shutdown continues into next week.

Rising wages and brisk hiring might cheer workers and give investors mixed feelings, but from a recruiting perspective, the challenges to employers remain broadly the same as they have been over the past year: The labor market is still very tight, even with the return of all these no-longer-discouraged job seekers, and employers still face significant skills gaps in critical areas. LinkedIn’s 2018 Emerging Jobs Report, released in December, highlighted the persistent hunger for skilled employees, including not only talent in cutting-edge fields like AI and blockchain, but also the administrative and sales professionals who constitute the backbone of a corporation:

  • Basic business functions are surging. AI may be on the rise, but it can’t replace the power of humans. Basic operational functions like Administrative Assistant, Assurance Staff and Sales Development Representative also landed spots on the Emerging Jobs list. And when looking at the fastest-growing roles in the country, nearly all of them are roles that have been steadily growing for years, including Software Engineer, Account Executive, and Recruiter.
  • The largest skills gaps are soft skills. Despite technical roles making a strong showing on this year’s Emerging Jobs list, soft skills – like oral communication, leadership and time management – make up nearly half the list of skills with the largest skills gaps. While hard skills are important, it remains imperative for professionals to maintain their arsenal of soft skills in this rapidly changing jobs landscape because those that have them, have a leg up.

Looking ahead to 2019, US employers will still have to worry about developing their existing workforces to fulfill their need for digital skills, as well as adjusting their recruiting strategies to changing patterns of candidate behavior that reflect a highly competitive, digital, and candidate-driven labor market. Gartner for HR Leaders clients can learn more from our latest research on reskilling the workforce for the digital era, while Gartner Recruiting Leadership Council clients can read our new study, The Decisive Candidate, on how the candidate journey has changed and how to design a candidate experience that attracts the right people to your organization.