In December, the economy added roughly 145,000 jobs. Experts expect that to pick up a little in the Labor Department's January reading. That would keep the unemployment rate at about three and a half percent nationally.
Bankrate.com senior economic analyst, Mark Hamrick said finding qualified workers was reportedly the top issue for business owners in December.
"For workers, it's a great situation when the unemployment rate is low because that means they have a good probability of finding a job and possibly even getting the pay they're looking for. Employers, on the other hand, right now, are struggling to find well-qualified workers," said Hamrick.
He said the job market is experiencing a tug of war between declining job openings and the struggle to find well-qualified workers.
"The small business trade group, the National Federation of Independent Business says that many of its employers are looking to hire, but the majority of those are not finding the quality of worker that they are willing to accept," said Hamrick.
Hamrick put out anoutlook on January Jobs Report:
Headlines: Hiring has slowed in the U.S. but remains sufficient to keep the nation’s unemployment rate steady after hitting a half century low 3.5%. That’s likely still the case with the forthcoming January reading from the Labor Department. The Federal Reserve has recently talked of “modest” improvement in the job market with worker shortages weighing on both job growth and occasionally business expansion. Even so, the Fed remains on hold with rates for the foreseeable future.
Year-over-year slowdown: Employers added an average of 176,000 jobs a month in 2019, compared to 223,000 in 2018. A further slowdown is expected this year. 145,000 jobs added in December was the third lowest of the year and below expectations.
Lower wage workers getting pay bumps: Overall wage growth has been just so-so with average hourly earnings up 2.9% over the year ending in December. At the low end of the pay spectrum, one factor helping are January’s boosts in minimum wages by 21 states and 26 local governments with more to come this year.
Tug of war for workers, employers: The job market is caught between declining job openings and trouble finding qualified workers. Labor Department figures show that job openings in the U.S. fell in November by the largest amount since August 2015, at the lowest level since early 2018. At the same time, the number of reported job openings remains above the number of unemployed individuals, by the government’s count.
Small business trade group, the National Federation of Independent Business said finding qualified workers was the top issue for business owners in December. A majority reported they were either hiring or trying to hire, but 94% of the owners reported few or no qualified applicants for the positions they looked to fill.
The National Association for Business Economics found that for the first time in a decade, the number of firms reporting falling employment was equal to that of those reporting rising employment in the final quarter 2019.
Global downgrade: The global economy is bogged down by rapidly changing and challenging issues. While the U.S and China have declared a ceasefire in the trade war, the International Monetary Fund recently downgraded global growth this year from 3.4% to 3.3%. That was before fears of an Asia-centric economic slowdown linked to the outbreak of coronavirus began rippling through financial markets. Closer to home, the IMF estimates 2% U.S. growth this year after 2.3% in 2019.
Sectors to watch:
Government: Uncle Sam needs workers. The U.S. Census Bureau needs to fill 500,000 temporary jobs paying between $15 and $30 an hour to conduct the annual population count.
Goods-producing: The U.S. manufacturing sector continues to shed jobs, including the loss of 12,000 in December. This week’s Institute for Supply Management report showed a return to growth for the first time since last July. China’s economy is clearly taking a hit from the coronavirus. How much it dampens the global economy remains to be seen.
Retail: Store closing announcements signal no end in sight to disruption in that sector. With that, many retail workers are losing their jobs.
Housing-related: This sector has seen a boost in activity helped by the decline in mortgage interest rates. Mortgage rates have taken a renewed and pronounced move lower as financial markets swooned in response to the coronavirus outbreak. As a result, the average for the 30-year fixed rate mortgage is at the lowest level since November 2016, according to the latest weekly survey from Bankrate.
Action items: What does it mean?
Job seekers, your results may vary: If you are inclined to look for work, this broadly remains a good time to do so. But specific skills and location matter. Many local markets remain solid, but many small to mid-size communities across the country have continued to struggle. Sectors recently reporting employment gains include financial, insurance and real estate. Those reporting declines include the goods-producing realm (manufacturing), transportation, utilities, information and communications.
Holding patterns for borrowers, savers and Federal Reserve: The patient Federal Reserve remains on hold after cutting interest rates three times last year, having reaffirmed that stance during their recent meeting. While peak U.S.-China trade tensions may have passed, the nation’s central bank will be monitoring for economic fallout from the coronavirus, impacts involving Brexit and any November election surprises. This means borrowers and savers will continue to either celebrate or bemoan a low interest rate environment: good for borrowers and stock investors, less helpful for savers.