This morning’s report from the Bureau of Labor Statistics shows that December payroll employment growth was 145,000 and year-over-year nominal wage growth was 2.9%—the lowest it’s been in 18 months. The unemployment rate came in at 3.5%, holding steady since November.

Today’s report gives us a chance to look back on the whole of 2019—and look toward the year ahead. Average monthly job creation has held remarkably steady for the past nine years, but it did soften in the last year, from 223,000 in 2018 to 176,000 in 2019. The one-time boost of the fiscal stimulus from 2018 has worn off and may have contributed to the slightly weaker job growth in 2019.

At the current pace of growth, however, the labor market continues to not only absorb population growth, but also chip away at the slack remaining in the labor market—namely workers who continue to be sidelined and who I expect will enter or re-enter the labor market as opportunities for jobs and better pay expand. As the unemployment rate has continued to fall between 2018 and 2019, labor force participation has increased as people re-enter the labor market and find jobs. Since December 2018, the unemployment rate dropped 0.4 percentage points (3.9% to 3.5%) while the employment-to-population ratio, or the share of the population with a job, rose 0.4 percentage points (60.6% to 61.0%). This means the unemployment rate over the last year fell for the right reasons—not because workers despaired and gave up looking, but because more would-be workers actually found jobs.

Wage growth, meanwhile, has slowed for much of the year, providing further evidence that we are not yet at genuine full employment. After hitting a recent high point of 3.4% year-over-year wage growth, the growth rate has measurably decelerated and wage growth closed out the year at only 2.9% in December. As would-be workers become scarcer, we would expect employers to have to work harder to attract and retain the workers they want. Wage growth is the most important indicator to watch in 2020.

Overall, the number of jobs still being created with the unemployment rate at near-historic lows along with slower than expected wage growth undermines the conventional wisdom that the economy has reached or passed full employment. Looking ahead, if the Federal Reserve stays the course and there are no unexpected policy decisions elsewhere, I expect the labor market to continue growing stronger in 2020.