By Amara Gatto
As an encouraging start to this pivotal election year, 225,000 jobs were added in the United States economy in January of 2020. In 2019, monthly job growth averaged around 175,000, and experts initially only expected 160,000 jobs to be added to in January. The unemployment rate stood at 3.6 percent at the end of the first month of the year, which is close to a 50 year low. Jobs have continually been added for the past 112 months, which is an economic record.
Certain sectors have been impacted more than others, such as the manufacturing industry. Jobs in this sector were actually cut by 12,000 in January, with workers in the automobile industry affected the most. This was the second month in a row that the manufacturing industry has suffered in this way. However, an unusually warm winter has allowed for substantial growth in the construction, transportation, and hospitality sectors, with transportation employment increasing by 28,000 last month. As the transportation industry is currently not in a downturn, experts state that investors should not be concerned about the downturn in manufacturing jobs yet. If both industries were in decline, it would be a sign that there would be a future deterioration in the production, trade, and delivery of goods overall. The growth in the transportation industry suggests that the manufacturing slump is somewhat contained within the industry. Growth was also strong in the health care and warehousing industries.
In December of 2019, the unemployment rate was 3.5 percent, but the increase to 3.6 percent in January is due to an expansion of people joining the labor force in search of employment. The number of people grew by 574,000 people last month, which heightened the labor force participation rate up to 63.4 percent, its highest since the middle of 2013. Additionally, the percentage of Americans aged 25 to 54 who were employed or actively seeking employment raised to 83.1 percent from 82.9 percent in December of 2019, and 61.2 percent of the American population aged 16 and older had a job as of January. These new statistics are the highest the United States economy has experienced since 2008. With the growth in demand across many industries fueled by a generally strong economy, employers are willing to hire from groups that experience barriers to employment, such as those with disabilities.
Although this decrease in unemployment has generally been beneficial, it has also been a reason why wages have not been rising as much as previously anticipated. January’s hourly wages increased 3.1 percent from a year prior, which was weaker than in the middle of 2019, which experienced a 3.5 percent increase from the year previous. Fortunately, the average inflation rate of 2019 was reported to be 2.3 percent back in December, so employees have not been too adversely affected by this lackluster growth in earnings.
The two major events which could impede this economic growth in the first quarter of 2020 are that Boeing has halted production of its 737 MAX aircraft, and the outbreak of the coronavirus which originated in China. Both of these could hinder manufacturing output globally, but we must wait to discover how and if this affects the United States economy.