Jobs Report and the Monthly Employment Growth Statistics
Where the 312,000 Jobs Were Added in December
The U.S. economy gained 312,000 jobs in December 2018. The economy needs 150,000 new jobs each month to keep expanding. Strong growth means the Federal Reserve will probably continue raising interest rates at its future 2019 Federal Open Market Committee meetings.
Where the Job Growth Came From
Health care added 57,900 jobs. The industry remained a strong performer even during the recession. Trump's changes to health care initially dampened employers' confidence. On average, this sector adds over 30,000 jobs a month.
Leisure and hospitality gained 55,000 jobs. Most of these workers are hourly employees. The sector adds from 20,000 to 30,000 positions a month.
U.S. manufacturing gained 32,000 jobs despite the strong dollar and Trump's trade war. A strong dollar hurts exports. Countries in a trade impose tariffs, cutting into international trade declines. Durable goods gained 19,000 jobs. Auto manufacturing gained 1,800 jobs.
Pay close attention to how many manufacturing jobs are added or lost each month. This is a significant leading economic indicator. Factories add workers as soon as they receive a large enough order. It could take months or even years before the order ships and shows up in economic output. Manufacturing is a better indicator of recession than the service sector, whose job levels remain consistent through the boom-and-bust cycle.
The retail industry added 23,800 jobs to prepare for the holiday shopping season. Store managers had been slashing jobs since March 2017. Online sales have cut into bricks-and-mortar store sales. Wholesale, which usually follows retail, increased by 8,400 jobs.
The government gained 11,000 positions. Data for the report was collected before the federal government shutdown. If the shutdown doesn't end soon, it will affect next month's report.
Temporary help services added 10,300 jobs. Companies often add temp jobs when business is picking up, but they aren't confident enough to add full-time positions.
Financial activities gained 6,000 jobs. Banks are adding positions after the Fed began raising interest rates. Higher rates bring greater profitability to lenders because they can charge more for loans.
The mining industry, which also includes the oil industry, added 4,000 jobs. It was affected by a drop in oil prices. Excess supply from U.S. shale oil producers is lowering prices. OPEC is struggling to . As a result, future oil prices are expected to remain subdued. Utilities gained 500 jobs.
Transportation and warehousing added 2,200 jobs.
Industries That Lost Jobs
Information services lost 1,000 jobs. This sector, especially Silicon Valley, is critical to American global competitiveness.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ® is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report. It gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96 percent correlated with the revised BLS jobs report.
The Department of Labor also releases a . This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before. The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.