Hiring Remains Strong as 2018 Nears End

Women have taken majority of new jobs this year, data show

Roy Maurer By Roy Maurer December 7, 2018
Hiring Remains Strong as 2018 Nears End

U.S. employers added 155,000 jobs in November, falling below expectations but still a strong number in a banner year, according to the latest data from the U.S. Bureau of Labor Statistics.

The unemployment rate held at a 49-year low of 3.7 percent for the third month in a row and wages stayed above 3 percent.

U.S. payrolls have grown for 98 straight months, the longest stretch on record. More than 200,000 jobs have been added in four of the past six months.

"Most economic indicators today are still flashing a green light, and the nation's job market is strong and growing with more than 7 million unfilled jobs among employers today," said Andrew Chamberlain, chief economist at Glassdoor.  

Martha Gimbel, research director for Indeed's Hiring Lab added that solid—if not spectacular—job growth is not cause for concern. "We still added more than twice the jobs that the economy needs to add each month to keep the unemployment rate steady," she said.

Julia Pollak, labor economist at online employment marketplace ZipRecruiter, agreed, explaining that the creation of 60,000-70,000 new jobs each month is enough to keep pace with the growth of the working-age population.

But there are signs that expansion may be slowing. "Job growth is strong, but has likely peaked," said Mark Zandi, chief economist at Moody's Analytics. Moody's and the ADP Research Institute in Roseland, N.J., reported that private-sector employment grew by 179,000 jobs in November, based on ADP payroll data from over 400,000 organizations in the U.S. "This month's report … suggests slowing underlying job creation," Zandi said.

The jump in the share of involuntary part-time workers from 2.8 percent in October to 3.0 percent in November could be another troubling signal. "Even with solid jobs growth and wage growth above 3 percent, there remains a portion of the workforce stuck in involuntary part-time work," Gimbel said. "It is surprising in a labor market this strong that these workers are struggling to find the full-time work they want."

Pollak pointed out that the number of people who want jobs but are not in the labor force at all also continues to rise. "Many people outside the labor force say they would return to paid employment under the right conditions," she said. "Recent changes employers have made—raising wages, offering more full-time work, offering more flexible schedules—have made working conditions attractive enough to pull workers off the sidelines, especially women."

Pollak said that most of the net new jobs created since the start of 2018 have gone to women and likely reflect two trends:

  • Growth in female-dominated sectors, like health care.
  • Employers trying to widen their talent pool and offering working conditions that are more attractive to mothers, such as flexible schedules.

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Health Care, Professional Services Lead Gains

The fast-growing health care and professional services sectors showed the strongest job gains in November, adding 32,000 jobs a piece. They were followed by manufacturing (+27,000 jobs), transportation and warehousing (+25,400), and retail (+18,200).

Employment declines in retail subsectors such as clothing, electronics and book stores were outweighed by an increase in hiring at general merchandise stores, explained Josh Wright, chief economist for recruitment software firm iCIMS, based in Holmdel, N.J.

"There is still almost no sign that tariffs and trade fears are having an impact on manufacturing employment," he added. "There was a little bit of weakness in auto parts manufacturing, but that's no shocker after recent headlines."

Pollak said that manufacturing job gains may reflect increased onshoring. "As more manufacturing becomes automated, labor cost-savings from offshoring become less important," she said. "Technological innovations may be making it easier for manufacturers to establish plants domestically and simplify their supply chains."

Midsized businesses produced the lion's share of job creation in November, according to the ADP report. "Midsized businesses added nearly 70 percent of all jobs last month," said Ahu Yildrimaz, vice president and co-head of the ADP Research Institute. "This growth suggests they could be more insulated from the global challenges large enterprises face." 

Is Wage Growth Sustainable?

Average hourly earnings increased 6 cents in November to $27.35, the second-straight month that year-over-year wage growth rose above 3 percent.

"With the labor market hitting full employment, wages are beginning to rise in a wide variety of sectors," Chamberlain said. "Our local pay reports show steadily rising wage gains throughout 2018, with pay rising at more than 4 percent annually in tech-heavy metros like San Francisco and New York City. In November, we reported strong pay gains in health care, retail, food services, tech and transportation roles."

Wright noted that while wages are rising, it's not clear if the pace of gains is accelerating. "Breaching 3 percent is certainly good news for workers but how rapidly wages will accelerate from here remains to be determined," he said. "Workers have more bargaining power now, but with headline inflation softening, they may be a touch less insistent, and we already have years of evidence suggesting the wage-setting process is a complicated one."



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