For Wall Street, the labor market is often viewed as a proxy on the future outlook of our economy. In other words, when employers are confident in their economic future, they are more willing to commit the capital, resources and time to hire additional labor. For workers, job security helps convert their wages to purchases of goods and services that ultimately drive our economy forward.
In 2018, the labor market soared, driven by the surge in the U.S. economy. This year, much like our national economy, the labor market remains strong but is starting to show signs of fatigue.
Released by the Department of Labor, September’s Employment Report showed the national unemployment rate fell to just 3.5% — a new 50-year low and down from the 3.7% rate reported in August. However, in September, the economy added only 136,000 new jobs, below the 145,000 the market was expecting.
Year-to-date, the economy has added more than 1.45 million new jobs, or about 161,000 per month. This is below 2018’s pace of 223,000 per month but still above the roughly 100,000 new jobs per month that’s needed to keep the U.S. economy growing and expanding.
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Of the 13 private sector industries used by the government to track job growth, in the first nine months of the year, the Education & Health Services industry added the most jobs with 484,000. Rounding out the Top 5 were Professional & Business Services (311,000), Leisure & Hospitality (166,000), Construction (110,000) and Financial Activities (81,000). Manufacturing was No. 8 with 41,000 new jobs added. Only three industries experienced a decline. The biggest loss was in Retail Trade, which so far has lost 77,600 jobs. The other two were Mining & Logging (-6,000) and Utilities (-3,500).
The latest Job Openings and Labor Turnover Survey (JOLTS) gave further evidence of a strong-but-softening labor market. Released each month by the Department of Labor, the survey reports the change in job openings, hires, quits, layoffs and other employee separations.
The August JOLTS reported 7.05 million unfilled job openings. This equates to 1.007 million more job openings than there are Americans who are unemployed and actively looking for work. April 2018 was the first time in U.S. history the number of job openings exceeded the number of unemployed Americans. Though August was the eighteenth consecutive month of this trend, the 1.007 million excess job openings is down from 1.11 million in July and 1.55 million in April.
Taken as a whole, the latest labor market data does provide some comfort on the state of the U.S. economy. No, it’s not the high-octane pace that matched last year’s burst of economic growth. But it does appear strong enough to generate a steady supply of jobs. And for the American consumer, it is jobs that will keep them spending and driving this economy forward.