None of the figures reported on Friday will cause the Fed to budge from its forecast of no rate cuts or hikes in 2020.
Hiring in the economy closed out the year with a gain of 145,000 jobs in December, making for an overall increase of 2.1 million in 2019, the Labor Department reported on Friday.
But most notable in the report was a milestone in the rise of women in the labor force. For the first time since 2010, women comprise the majority of workers, holding 50.04% of nonfarm jobs, or 109,000 more than men. The totals exclude the self-employed. It culminates a steady rise and shows the growing importance of the service sector, where jobs are held more often by women.
The milestone came amid a cooling of job gains in 2019. The yearly gain of 2.1 million jobs represents a modest decline from the 2.7 million jobs added in 2018 and is down from the cyclical high of a little more than 3 million in 2014.
The unemployment rate held steady at 3.5% on the month as average hourly earnings slowed to a 0.1% gain on the month and 2.87% on a year-ago basis.
The three-month average annualized hourly earnings – our preferred way to measure wage gains — eased to 2.83% from 2.89% in November and a 2019 peak of 3.59% in September.
None of the figures reported on Friday will cause the Fed to budge from its forecast of no rate cuts or hikes in 2020. Modest wage and labor market gains are consistent with the Fed’s forward-looking statements on policy barring a significant exogenous shock to the economy.
But a deeper look at the numbers shows just how much the workforce, and the broader economy, is changing.
Labor force participation of women ages 25 to 54, the prime working age, stands at a cyclical high of 76.5% and that of men stands at 89.3%. But the cyclical dynamics implies that women have the initiative in traditional employment.
For medium- and large-size firms, this is one of the major trends that is changing the way companies recruit and retain workers. Over time — and it cannot be fast enough – this will result in an equalization of wages. We all often look for tangible evidence of change. It is now here in the data and can be used as a benchmark to measure equality in the labor force and the economy.
Strong monthly gains
Aggregate hours inched ahead by 0.1% on the month and is up 1.1% on a three-month average annualized pace, which implies a modestly slower pace of spending to close out the holiday season. It also underscores the somewhat difficult holiday spending period excluding mobile and e-commerce platforms.
Private service providers added 140,000 jobs on the month, supported by gains of 40,000 in trade and transport, 41,000 in retail trade, and 40,000 in leisure and hospitality while education and health grew by 36,000 on the month. The higher-paying construction sector added 20,000 jobs while manufacturing shed 12,000 and the goods-producing sector shed 1,000 on the month.
Over the past several months, monthly jobs gains have been somewhat strong compared to the consensus forecast. During past business cycles, one tends to observe an overstatement of job gains near the end of business cycles, leaving many economists with a nagging suspicion that the benchmark to the Bureau of Labor Statistics estimate in February for the January estimate will observe noticeable downward revisions to the total labor force.
We expect roughly 500,000 jobs to be removed from the overall tally going back to March 2019, with preliminary B.L.S. data indicating that policymakers and investors can count on solid but slowing labor market dynamics ahead in 2020.