Chart of the week
The US economy got off to a good start in 2020 with 206,000 job creations. 36% more jobs were created in the second half of 2019 than in the first six months of the year.
The unemployment rate increased slightly, but this was due to a stronger labour force participation rate*. At 63.4%, participation is now at its strongest since the start of 2013, albeit significantly below pre-2007 levels. The participation rate is calculated as a percentage of the working-age population, which in the US includes everyone aged 16 and over. Population ageing therefore puts the ratio on a downward trend.
The participation rate in the 25–54 age group is the strongest and currently stands at 83.1%, a figure not seen since 2008. It falls slightly short of the all-time high of 84% reached in 2000.
Our analysis
The graph above shows that much of the increase in the participation rate since 2015 is due to the female component, which has risen from 74% to 77%. This shift accounts for approximately three quarters of the increase in the rate from its low point. Meanwhile, the male participation rate has risen by approximately 1%-point over the same period.
While the female participation rate has found its way back to the highs seen in 2000, the same cannot be said for its male equivalent. Is this trend set to continue? Looking to Japan would suggest so, especially since the most prolific job-creating sectors in recent years are dominated by women. This means that the cause and effects of the stagnating male participation rate could become a serious challenge for the US economy.
*The labour participation rate is calculated by converting the number of people in the labour force as a percentage of the working age population.
See also : Eurozone: did growth bottom out in Q4 2019?
The opinion expressed above is dated 07 February 2020, and liable to change.
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