The U.S. added an impressive 250,000 net new jobs in October 2018 (preliminary), with 1.488 million net new jobs year-to-date compared to 1,464 million a year ago for the same period – an increase of 1.61 percent. The total gain in the prior 12-months of 2.516 million represented a 1.71 percent annual job growth rate compared to the 2.149 million net new jobs a year ago.
The following graph shows the total job gains for the prior 12-months. Note the two hand-drawn lines showing the trends in job growth commencing from 2015 through 2017 and then for 2018. The job growth rate from 2015 to the end of 2017, while still positive, essentially diminished, but has turned upwards in 2018.
The U.S. continues the trend of having more jobs than any time in history, as shown in the following graph. From the pre-recession peak in January 2008, total job loss was 8.7 million to the February 2010 trough. Since then, the U.S. has created 20.0 million net new jobs.
Job gains for 2018 are not a simple equation from the prior year, but vary month-to-month on a year-over-year basis. The next graph shows the net new job gains monthly since 2016.
Employment in the Leisure and Hospitality sector (in my opinion) is a great proxy of the overall health index of the U.S. economy. People do not spend money on vacations, cruises, entertainment, spas or dinners out unless they feel good about the future economy. My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality matches or exceeds that of the country overall. Current Leisure and Hospitality job growth in the prior 12 months was 1.37 percent versus 1.71 percent for the total economy. Impacting growth in this sector, however, is the lingering effect of Hurricane Florence on the U.S. Leisure & Hospitality sector. I see no recession on the horizon at this time foregoing unanticipated economic shocks.
Average hourly earnings were up 5 cents in October compared to September to $27.30. Hourly pay increased 83 cents in the past 12-months for a gain of 3.1 percent – the strongest wage growth seen in nine years. Hourly earnings monthly since 2007 are shown in the following graph.
Other items in the October 2018 jobs report:
- Number of Persons Unemployed for Less Than 5 Weeksdropped by 8,000 from a month ago, now at 2.057 million versus 2.065 million a year ago
- Long-Term Unemployed(jobless for 27 or more weeks), now at 1.373 million versus 1.384 million a year ago, was down 11,000 from September
- Civilian Labor Force Participation Rate is now 62.9 percent, similar to the 62.7 percent a year ago
- Unemployment The number of unemployed people dropped from 6.524 million in October 2017 to 6.075 million as of the end of October 2018 – a drop of 449,000 (6.9 percent)
- Employment-Population Ratio is now 60.6 percent versus 60.2 percent a year ago – the bigger the better
- Number of Persons Employed Part Time for Economic Reasons(also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), declined by 259,000 from the prior month and is down to 4.621 million compared to 4.880 million a year ago
- Marginally Attached to the Labor Force (not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) now at 1.491 million was at 1.535 million a year ago. Within that group, 506,000 were classified as Discouraged Workers– persons not currently looking for work because they believe there are no jobs available for them. Discouraged Workers fell by 18,000 in the past 12 months but increased by 123,000 from September
The next table shows the job change (in thousands) for Employment Super Sectors. For example, manufacturing added 296,000 net new jobs in the past 12-months and made up 8.56 percent of all jobs. Although the Mining and Logging Super Sector (which includes oil and gas) posted a 9.41 percent increase in the past 12-months, the category makes up just 0.51 percent of all U.S. jobs.
To read the entire latest news release on U.S. employment click https://www.bls.gov/news.release/pdf/empsit.pdf
The job growth rate is no doubt being constrained by the lack of available workers. I reiterate my expectation for an ongoing increase in the hourly compensation rate given the lack of skilled workers to fill available positions.
Many of the reasons that the job growth rate remains stuck in the 1.7 percent range is that anyone that has marketable skills either already has a job, lives in a locale without demand for their skill set, or really does not want to work.
A GREAT Jobs Report.