Editor's Note: This report is based on survey data from January 2023 that was published in February 2023. This is the most recent data available. (Source: Bureau of Labor Statistics)
U.S. payrolls added 517k jobs last month while unemployment dropped to 3.4%, which marked the first time the reported unemployment rate dipped below 3.5% since the late 1960s.
Not only do these job additions significantly exceed both the predictions of most economists, as well as the 375k new jobs averaged each month of 2022, but it is also all the more impressive that this job growth was accomplished while interest rates are higher than they’ve been in decades.
The newly added jobs were fairly well spread across various industries, with the largest share going to leisure and hospitality that added almost 130k jobs.
The professional and business services industry was not far behind, adding about 84k jobs last month, while government jobs increased by just under 75k–almost half of which resulted from the return of state university workers following a strike.
Other industries that showed positive job growth include the healthcare industry, which increased its ranks by 58k workers. About half of the new healthcare job gains went to ambulatory care, and the construction industry grew by 25k. Finally, warehousing/transportation, social assistance, and manufacturing each upped their payrolls by about 20k employees.
Not all industries saw growth, however, and while there were no industries that experienced a reduction in the size of their employed workforce, there were several industries–including mining, oil and gas extraction, wholesale, information, and financial services–that saw no significant month-to-month change either way.
Average hourly earnings continued to grow, though the pace has slowed, increasing by a dime last month to $33.03. The length of the average workweek also rose, growing by 0.3 hours to an average of 34.7 hours per week.
Notably in light of supply chains that are still playing catch up from the early days of the pandemic, the average work week of manufacturing workers grew by 0.4% last month, bringing it up into overtime territory at 40.5 hours. To that point, manufacturing overtime grew from averaging practically no hours of overtime two months ago to an average of three overtime hours each week last month.
While a record-setting low unemployment rate tends to be attention-grabbing, it didn’t require much of a month-over-month drop to get there.
The real story of the most recent report remains one of stability, just as it was throughout most of 2022.
In fact, since February of last year, the unemployment rate has dropped less than half of one percentage point, which is remarkably consistent especially at these historically low levels.
What’s possibly more remarkable, however, is that the job market has remained defiantly hot in the face of the Fed’s barrage of interest rate hikes that were implemented in an effort to cool the job market and combat inflation.
Further, with more than 11 million job openings currently posted, accounting for more than two openings for every unemployed job seeker, these market trends seem poised to continue.
Given these numbers, coupled with inflation dropping down to the Fed’s target rates and GDP growth at nearly 3% to close out the final quarter of last year, it appears that the growing chorus of recession-predicting soothsayers will have to delay their crescendo a few more bars.
Is this what it looks like to be approaching the soft landing that the Fed has attempted to steer us toward?
We’ll check back in as additional data becomes available, but for now stability around historic low unemployment levels will remain the banner headline.
Eager for more exclusive content? Check out the Mployer Advisor blog, or review last month’s employment numbers here.
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