February 7, 2025

Payroll employment climbed by 143 thousand in January after having risen by 307 thousand in December and 261 thousand in November.  The December gain was revised upwards by 51 thousand while November was revised upwards by 49 thousand.   In the past three months the average increase has been 237 thousand.  The Bureau of Labor Statistics said, “Wildfires in Southern California began in early January and continued through the reference periods for both the household and establishment surveys. Severe winter weather occurred in much of the country during the January reference periods for both surveys. These events had no discernible effect on national payroll employment, hours, and earnings from the establishment survey, nor on the national unemployment rate from the household survey.”  While hard to believe that is what the BLS reported.  If so, employment has risen sharply in the past three months, but with a very erratic monthly pattern.

In addition to hiring workers employers can also alter the length of the workweek for their existing workers.  The nonfarm workweek declined 0.1 hour in January to 34.1 hours after falling 0.1 hour in December.  Prior to the recession the nonfarm workweek was averaging 34.4 hours so it is weaker than it was five years ago.  It is hard to believe that employment has been so strong while at the same time employers have been significantly shortening the workweek.  We suggest that in the past three months the labor market has remained relatively stable.  It is important to remember that employment changes drastically with the hiring and subsequent laying off of temporary workers in connection with the Christmas holiday season and, in this case, the distortions may well be complicated by the California wildfires and extreme cold weather that existed throughout most of the country.  Employment, hours worked, and average  hourly earnings could all be distorted.  Thus, we remain cautious about reading too much into the monthly changes for all of these series.

Job openings have fallen from a record high level of 11.7 million in early 2021 to 7.6 million.  Prior to the recession there were about 7.0 million job openings per month versus 87.6million currently. Today there are 1.1 job openings for every unemployed worker which is roughly where this was prior to the recession.

The change in employment and hours worked are reflected in the aggregate hours index which fell 0.2% in January after having declined 0.1% in December and 0.1% in November   The aggregate hours worked index increased 1.5% in the fourth quarter which led to a 2.3% increase in GDP during that quarter.  The aggregate  hours index appears to be on track for an increase of about 0.5% in the current quarter.  We anticipate a GDP increase of about 3.0% in the first quarter.

Construction employment rose by 4 thousand.   Manufacturing employment rose by 3 thousand.  Retail trade jobs climbed by 34 thousand.  Transportation and warehousing rose by 1 thousand.  Info tech jobs increased by 2 thousand.  Financial sector jobs climbed by 7 thousand.  Professional and business services declined by 11 thousand..  Health care jobs climbed by 44 thousand.   Social assistance gained 22 thousand.  Leisure and hospitality jobs fell by 3 thousand.(restaurant employment fell by 16 thousand.  Weather?).     Government jobs rose by 32 thousand.

GDP growth was 2.3% in the fourth quarter.  We expect GDP to grow about 3.0% in both the first quarter and for 2025 as a whole.

Stephen Slifer

NumberNomics

Charleston, S.C.