February 7, 2020

In any given month employers can boost output by either additional hiring or by lengthening the number of  hours that their employees work.  Payroll employment for January rose 225 thousand.  On average jobs are climbing by about 175 thousand per month versus 193 thousand workers hired monthly in 2018.  The smaller increases in employment in 2019 are attributable to the manufacturing sector where jobs have slowed from 22 thousand per month in 2018 to 5 thousand last year.

The nonfarm workweek was unchanged in January at 34.3 hours  This series has been bouncing around between 34.3 and 34.5 hours for the past year.  The current elevated level of the workweek  in most industries implies that employers are in need of workers and will continue to hire at a meaningful pace in the months ahead.

The increases in  employment and hours worked are reflected in the aggregate hours index which rose 0.2% in January after climbing 0.1% in December.  For the fourth quarter this index rose 1.3%.  It seems to be on a similar growth track starting out in the current quarter.

The factory workweek was unchanged in January at 40.4 hours.  The factory workweek is lower than it was a year ago which reflects the toll  tariffs are taking on the manufacturing sector..  Recent purchasing managers data suggest that the down-slide caused by tariffs may be leveling off.  We expect the factory sector to be essentially unchanged for the next several months.

Overtime hours were fell 0.1 hour in January to 3.1 hours after having been unchanged in December at 3.2 hours.  They have declined in the past year which, like the factory workweek, reflects the impact of the tariffs.

The economy continues to expand at a respectable pace.  We currently expect GDP to increase 2.4% in 2020.  The economy is currently being supported by robust growth in consumer spending and moderate growth in investment, but is being dragged down somewhat by the manufacturing sector.

Stephen Slifer


Charleston, SC