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State of the Labor Market

January 2020 Jobs Report: Labor Market off to Strong Start

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The US economy added 225,000 jobs last month, and the unemployment rate is at 3.6%, up slightly from 3.5% in December.

This year started with a bang as the labor market added more jobs than expected in January. This recovery is more than a decade old, and the continued gains in employment is a sign that it can continue for quite some time. 

Overall, this was a strong report. Even seemingly negative trends are actually positive. The slight increase in the unemployment rate might seem concerning, but it is actually due to a pick up in workers reentering the labor market. The labor force participation rate for people in their prime working years increased in January, but remains below previous highs. All signs point to a further pick up in this rate if the labor market continues to grow.

Employment growth gains in 2019 were revised down as expected, but even accounting for those changes, employment growth the past few years remains solid. Wage growth does continue to disappoint, but at this point, that trend is unlikely to turn around in one report.

This expansion has continuously disappointed on wage and pay gains, but its ability to pull more and more workers into the labor force is astounding.