March 8, 2024
Payroll employment jumped by 275 thousand in January after climbing 229 thousand in January and 290 thousand in December. In the past three months the average increase has been 265 thousand. The February increase was larger than the 195 thousand increase that had been expected, but there were downward revisions to the employment gains in December in January. The bottom line is that the employment gains remain sizeable. At the beginning of last year we were routinely seeing employment gains of 300 thousand per month. Thus, the labor market has not weakened much from where it was at that time. It has held up well in the face of sharp increases in interest rates.
In addition to hiring workers employers can also alter the length of the workweek for their existing workers. The nonfarm workweek rose 0.1 hour in February to 34.3 hours after having fallen 0.2 hour in January. It has continued its gradual descent in the past two months. It appears that firms do not want to let workers go for fear they may not be able to get them back when they need them. Instead, they are adjusting the workweek to contend with softening demand.
Job openings have fallen from a record high level of 11.7 million in early 2021 to 8.9 million, but firms continue to be unable to fill open positions. In fact, there are currently 1.4 job openings for every unemployed worker. The demand for labor continues to outpace supply.
The change in employment and hours worked are reflected in the aggregate hours index which rose 0.4% in January to 115.9 after having declined 0.4% in January. This index increased 1.4% in the fourth quarter and we ended up with a GDP growth rate of 3.2% thanks to a big increase in productivity. This index may increase by 0.6% in the first quarter which appears to be relatively consistent with our projected 2.2% GDP growth rate for that quarter.
The demand side of the economy has softened slightly but not enough to cause workers to start laying off bodies.
Manufacturing employment fell 4 thousand. Construction employment rose by 23 thousand. Retail trade jobs rose by 19 thousand. Health care jobs gained 67 thousand. Social assistance climbed by 24 thousand. Info tech jobs rose 2 thousand. Transportation and warehousing rose by 20 thousand. Leisure and hospitality jobs climbed by 58 thousand. Professional and business services increased 9 thousand. Financial sector jobs rose 1 thousand. Government jobs rose by 52 thousand almost exclusively at the state and local level.
Given these steady employment gains we expect GDP growth of 2.2% in the first quarter.
Stephen Slifer
NumberNomics
Charleston, S.C.
Steve –
In the first two lines, I believe your number for the average is incorrect and should
be 356,000 rather than 234,000.
You area correct Frank. I just changed it. Employment Fridays are tough. So much data to sift through on those days. Need to digest that, write something about each tidbit, and then write the weekly commentary. Easy to miss something.
Thanks for the heads up.
Is there a way to superimpose this data with the number of layoffs over the course of the same timeframe?
I keep hearing that there are a lot more layoffs this year but I don’t know where to verify that. Thanks!
Hi Tina,
I will send you a chart on initial unemployment claims (layoffs) to your e-mail. I would include it here but somehow I cannot figure out how to get these responses to include a chart. The bottom line is that layoffs overall have been dead flat for almost two years. We keep reading about layoffs by various firms, but it appears that those folks who lose their job are easily able to find a job somewhere else.
It could be the the UAW strike is beginning to boost layoffs, but that will presumably be just a temporary jump.
I tried to send the charts to tinacartigane@gmmail.com (shown above). It came back. Changed it to gmail.com. It came back again. If you give me your email address I will resend.