March 7, 2025
Private sector employment climbed by 140 thousand in February after having risen by 81 thousand in January and 287 thousand in December. The job gain was roughly in line with expectations, but the quality of the jobs has deteriorated. Many of those jobs being filled were part-time positions. And, as a result, many workers reported that they wanted a full-time position but could only find part-time employment. Firms have clearly become cautious.
In addition to hiring workers employers can also alter the length of the workweek for their existing workers. 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 considerably shorter than it was five years ago. Firms are concerned about the impact of tariffs on the economy in the months ahead and fear a slowdown. They are not yet willing to lay off workers, but they are choosing to work their existing employees shorter hours. If this continues, it will translate into job losses later this year.
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 7.6 million currently. Today there are still 1.1 job openings for every unemployed worker which is roughly where this was prior to the recession. Employers are getting nervous and the labor market has softened, but on balance the labor market is doing reasonably OK for now.
The change in employment and hours worked are reflected in the aggregate hours index which rose 0.1% in February to 116.1 after falling 0.2% in January and 0.1% in December as the workweek got shorter. The aggregate hours index appears to be on track for a decline of about 0.3% in the current quarter. We anticipate a GDP increase of about 1.5% in the first quarter. The cold weather and wildfires in California took a toll in January and employer uncertainty about the future economic outlook is accentuating the weakness.
Construction employment rose by 19 thousand. Manufacturing employment rose by 10 thousand. Retail trade jobs declined 6 thousand. Transportation and warehousing rose by 18 thousand. Info tech jobs increased by 5 thousand. Financial sector jobs climbed by 21 thousand. Professional and business services declined by 2 thousand.. Health care jobs climbed by 52 thousand. Social assistance gained 11 thousand. Leisure and hospitality jobs fell by 16 thousand.(restaurant employment fell by 27 thousand. Weather?). Government jobs rose by 11 thousand.
GDP growth was 2.3% in the fourth quarter. We expect GDP to grow about 1.5% in the first quarter and 2.5% for 2025 as a whole.
Stephen Slifer
NumberNomics
Charleston, S.C.
We have seen a change in the way companies are hiring employees. As the owner of the staffing company temp to hire has been a very popular strategy the last several years. Now companies are actually hiring people directly to their payroll and willing to pay fees. That would seem to indicate that they do not expect a downturn in the near future. Good news for all of us.
Thanks for the comment, Neil. From what you said, it certainly suggests that if they do expect a recession it will be short and mild and they will soon need those bodies. But what if rates really do need to go to 6% to slow things down enough to trigger the recession? The outcome may not be quite so mild. We will see.
Hello,
Please add me to your weekly newsletter distribution list. Thank you!
Jon Witherow
Hi Jon. I added you to the list. You should get it tomorrow at 2:00 p.m.