March 7, 2025
In any given month employers can boost output by either additional hiring workers or by lengthening the number of hours that their employees work. Payroll employment climbed by 151 thousand in February. In the past three months the average increase has been 200 thousand. Jobs are still being created, but employers seem to fear slower growth in the months ahead as tariffs take their toll. For now they have chosen to shorten the workweek of their existing employees, but if the expected weakness materializes they will lay off workers at some point down the road.
The nonfarm workweek was unchanged in February at 34.1 hours after having declined 0.1 hour in January and falling 0.1 hour in December. Prior to the recession the nonfarm workweek was averaging 34.4 hours so it is clearly weaker than it was five years ago. Firms are becoming cautious.
The changes in employment and hours worked are reflected in the aggregate hours index which rose 0.1% in February to 116.1 after having declined 0.2% in January and 0.1% in December. In the first quarter the aggregate hours index appears to be on track to decline about 0.3% which we believe will lead to a 1.5% GDP growth rate in that quarter.
The factory workweek was unchanged in February at 40.1 hours after having been unchanged in both December and January. The manufacturing sector has been fairly steady in recent months.
Overtime hours rose 0.1 hour in February to 2.9 hours after having been unchanged in January and having declined 0.1 hour in December.
Stephen Slifer
NumberNomics
Charleston, SC
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