State of the Labor Market

December Jobs Report: Slower Job Growth Is No Cause for Alarm

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December payroll growth fell short of expectations, and for once we can’t blame it on the weather. It was the second-lowest growth of the year, once we exclude the most weather-sensitive sectors. But there’s no cause for alarm. Monthly payroll growth of 148,000 is still twice what we need to keep up with sluggish working-age population growth: the labor market still has plenty of momentum. Among prime-working age adults, both labor force participation and the employment-population ratio are at their highest in years.

Some long-term labor-market trends reversed in 2017. Middle-wage industries grew fastest last year — even though the longer-term trend is toward greater polarization with more growth at the top and the bottom than in the middle. And manufacturing job growth outpaced the overall economy in 2017 after losing jobs in 2016, perhaps boosted by a weaker dollar and post-election economic confidence. Finally, wage and job gains went to the people who needed them most: workers with less education. The tight labor market should continue to lift wages, especially at the low end, in 2018, but longer-term automation is likely increase polarization.

Construction and information led job growth in December, with manufacturing picking up steam. Retail lost jobs — again.

Manufacturing job growth now outpacing the economy overall — after losing jobs in 2016.

Despite 87 months of job growth and low unemployment, some industries lost jobs in 2017 — apparel, many retail industries, and telecoms & broadcast.

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