The nation’s thriving labor market hit a wall in December with weak job growth of only 148,000, but American employers still managed to close out 2017 with more than 2 million new workers added to their payrolls.
Friday’s (Jan. 5) report from the U.S. Bureau of Labor Statistics shows the December U.S. unemployment rate was 4.1% for the third consecutive month with the number of unemployed persons, at 6.6 million, essentially unchanged. Over the year, the unemployment rate and the number of unemployed persons were down by 0.6% and 926,000, respectively.
Of the total 148,000 nonfarm jobs added to payrolls in December, well below Wall Street expectations of 190,000, most of the gain gains occurred in health care, construction and manufacturing. For the year, payroll employment growth totaled 2.1 million, slightly below a gain of 2.2 million in 2016.
The change in total nonfarm payroll employment for October touted widely by President Donald Trump was revised down from 244,000 to 11,000, while November data was revised upward from 228,000 to 252,000. With these changes, employment gains in October and November combined were 9,000 less than previously thought, BLS reported.
Going into 2018, many economic forecasters are hoping that the historic employment levels seen in Arkansas and the U.S. workforce will continue well into 2018. Those forecasting strong momentum over the next six months of the new year mostly cite the president’s historic tax cut package passed by Congress in December.
The Conference Board’s Chief Economist Gad Levanon said despite December’s tepid job growth that was below expectations, the U.S. labor market picture is brighter than this month’s figure suggests with average job growth exceeding 200,000 for the past three months and 170,000 for the past year.
“The underlying story is of a U.S. economy that has been significantly accelerating in recent quarters, which is leading to solid job growth,” said Levanon, managing director of the macroeconomic and labor market research for the independent business panel that provides a monthly gauge of consumer confidence in the U.S. “This strong momentum may even get stronger as we move into 2018. Tax cuts passed by Congress will provide an additional boost to the U.S. economy. We expect robust job growth to continue in the coming months.”
Still, Levanon and other economists appear concerned that the nation’s brimming labor pool will tighten, challenging businesses in 2018 to meet rapid growth demand in an environment where workers are harder to find.
The Paychex-IHS Markit Small Business Employment Watch closed the year with a decline in small business job growth and wages up over the previous year. The highly-watched job index for smaller businesses now stands at 99.70 in December, down 0.16% for the month and 0.78% for the year.
“Small business job growth has slowed in 2017, even as the rest of the economy accelerated,” said James Diffley, chief regional economist at IHS Markit. Added Paychex President and CEO Martin Mucci: “While small business jobs growth slowed this year, it’s important to recall that small businesses led the hiring surge coming out of the recession and maintained high levels of growth for quite some time,” said “It will be interesting to see the impact tax reform makes on job and wage growth in the months ahead.”
Arkansas’ jobless rate edged up one percentage point to 3.7% in November as the state’s civilian labor force decline by more than 6,000 as fewer workers sought gainful employment ahead of the holiday season, according to BSL data release by the state Department of Workforce Services.
On his Arkansas Economist blog, University of Arkansas of Little Rock forecaster Michael Pakko said the slower pre-Christmas growth was a recent break from the strong numbers posted earlier in the year.
“The latest information on Arkansas employment and unemployment was disappointing, with both the household and payroll reports showing weakness in November,” said Pakko, director of UALR’s Arkansas Economic Development Institute.
Nationwide, the labor force participation, at 62.7%, was unchanged over the month and has shown little movement on net over the past 12 months. The number of persons employed part time for economic reasons was essentially unchanged at 4.9 million in December but was down by 639,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.
The “U-6” jobless rate, which includes those “marginally” attached to the labor force and person employed part-time but seek full-time work, was 7.9%, down from 8.1% in November and well below year ago levels at 9.1%. Some economists point to the U-6 number as a better measure of the economy with respect to jobs.
SECTOR EMPLOYMENT NUMBERS
Health employment in health care increased by 31,000 nationwide in December. Employment continued to trend up in ambulatory health care services and hospitals. For the year, the robust health care sector saw 300,000 job adds in 2017, compared with a gain of 379,000 jobs in 2016.
Construction added 30,000 jobs in December, with most of the increase among specialty trade contractors. In 2017, construction employment increased by 210,000, compared with a gain of 155,000 in 2016.
The nation’s manufacturing sector continued to surprise with employment gains of 25,000 in December, largely reflecting a gain in durable goods industries. Over the past 12 months, U.S. manufacturers have added 196,000 jobs, compared to a loss of 16,000 jobs in the previous year. In Arkansas, there are now 160,800 manufacturing workers in the labor pool, up from year ago totals of 156,000.
Employment in food services and drinking places changed little in December. Over the year, the industry added 249,000 jobs, about in line with an increase of 276,000 in 2016. Job adds in the professional and business services category add 19,000 jobs in December. In 2017, the white-collar industry added an average of 44,000 jobs per month, in line with its average monthly gain in 2016.
December employment in retail trade was down by 20,000, largely due to a loss of 27,000 positions at general merchandise stores ahead of the important run-up to Christmas. For the year, retail trade employment saw a downturn of 67,000 jobs after increasing by 203,000 in 2016.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in December. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, while overtime remained at 3.5 hours.
Average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.63. Over the year, average hourly earnings have risen by only 65 cents, or 2.5%. According to HIS-Market data, hourly earnings in the small business sector averaged a growth rate of 2.85% for 2017, up from the 2016 average of 2.75%.