April 5, 2024
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 303 thousand in March. At the same time the nonfarm workweek rose 0.1 hour to 34.4 hours.
The monthly employment gains remain robust. Thus, hiring has held up remarkably well given a sharply higher level for the fed funds rate. The workweek fell sharply in January which likely reflects the miserable winter weather conditions that existed in that month. The workweek gains in February and March return it to the level that existed throughout 2023.
The changes in employment and hours worked are reflected in the aggregate hours index which rose 0.5% in March after climbing 0.4% in February after having declined 0.4% in January In the first quarter this index rose 1.0% which seems relatively consistent with our projected GDP growth rate of 2.5% for that quarter assuming productivity rises by 1.5%.
The factory workweek was unchanged in March at 40.0 hours after having risen 0.2 hour in February after having been unchanged in January. The manufacturing sector has slowed gradually in response to higher interest rates, but it appears to have leveled off in recent months.
Overtime hours fell 0.1 hour in March to 2.9 hours after having risen 0.2 hour in February to 3.0 hours after having fallen 0.1 hour in January. Manufacturers appear to have adjusted to the prospect of reduced demand by cutting overtime hours.
Stephen Slifer
NumberNomics
Charleston, SC
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