The U.S. economy added 312,000 jobs in December and the unemployment rate was 3.9 percent, marking a strong finish to 2018.
Hiring remained strong in 2018, especially in manufacturing. But economists cautioned that growth is expected to slow in 2019 because of trade fears and the duration of the nearly decade-long recovery.
The December numbers follow a year of steady growth across industries – particularly manufacturing, which had its biggest boost in about a decade. There were some exceptions, including retail and food services. And economists caution that the pace of hiring overall is expected to slow in 2019.
At this stage of the nine-year recovery, maintaining the streak that took off in 2014 is projected to become increasingly difficult. Trade tensions with China and other countries could accelerate this slowdown, since President Trump’s tariffs are raising the cost of doing business worldwide.
Those uncertainties are already playing out in the volatile stock market, but so far America’s labor market has remained robust.
Last year started with an unemployment rate of 4.1 percent. The jobless rate dropped to 3.7 percent in September – the lowest since 1969.
Manufacturing experienced a major rebound, producing 249,000 jobs from in 2018 through November. That’s the biggest annual upswing since the Great Recession and well above the 2017 figure (207,000).
Manufacturing combined with a surging oil and gas sector and steady growth in construction jobs to produce what looks to be the best year for blue-collar, goods-producing jobs since 2014.
There’s some question if the boom will continue, however. Crude prices have fallen for the past three months.
“We’re seeing two different economic realities right now,” said Martha Gimbel, research director for the Hiring Lab at Indeed, an employment website. “One is the stock market, which is going through something, and the other is the labor market, which has been chugging along.”
The typical worker’s year-over-year earnings grew by 3.1 percent in October – the biggest jump since 2009. Wage growth held to that pace in November, according to the Bureau of Labor Statistics. But inflation ticked up in 2018, offsetting some of that bump.
If monthly job gains start shrinking in 2019, people shouldn’t panic, Gimbel said. Since 2010, one in 10 months have seen less than 100,000 new jobs added.
The economy needs to add 80,000 jobs a month just to maintain current staffing levels, said Joseph Brusuelas, chief economist at RSM, an international consulting firm.
November’s gain was 155,000 – a healthy gain, even though it was smaller than analysts predicted.
Trade tensions, however, will take a bite out of this year’s progress, he said, if Trump and Chinese leader Xi Jinping don’t reach a deal to end their dispute by their self-imposed March deadline.
“You’re going to see a slowdown in business investment and hiring, especially by large firms,” Brusuelas said. “The large multinational firms derive roughly half of their revenues from the global sector.”
Apple pointed to the trade war Wednesday when it lowered its quarterly sales estimates for the first time in 15 years. Chief executive Tim Cook blamed tariffs and China’s slowing economy.
Job growth has also slowed considerably in the lower-paying service sector in the first two years of the Trump presidency. The enormous retail trade industry, in particular, has suffered. Growth in federal, state and local government jobs, which had been picking up pace, tapered off.
Overall, however, 2018 was a year that shifted more power to workers, said Josh Wright, chief economist at iCIMS, a hiring software firm.
As competition for employees intensified, companies expanded their search for hires. Workers who have struggled with disproportionately high joblessness found more opportunities.
Black Americans started the year with an unemployment rate of 7.7 percent; by November, that figure had dropped to 5.9 percent. The jobless rate for Hispanics fell from 5 percent to 4.5 percent.
“Employers were stretching to meet new people and invest in people,” Wright said. “There’s a lot to cheer for.”
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