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Editor's Note: This report is based on survey data from December 2023 that was published in January 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
US companies turned in another expectation-exceeding performance last month, adding 267 thousand new jobs and topping the adjusted 173 thousand new jobs from the month before by a significant margin.
At the same time, the unemployment rate held steady at 3.7% for the second month in a row after coming down by two-tenths of a point in November, marking the twenty-third consecutive month with unemployment below 4%.
The final month of 2023 from which this data was gathered mostly reflected stability - both on a monthly and an annual scale.
For example, the number of long term unemployed people in the US is currently about 1.25 million, which isn’t substantially different than it was a month ago at 1.22 million, nor is it substantially different from the 1.11 million American adults categorized as long term unemployed in December of 2022.
Similarly, while the labor force participation rate fell by three-tenths of a point last month from 62.8% to 62.5%, neither of these figures are meaningfully different from the 62.3% labor participation rate measured the same time one year ago.
On the other hand, there was a little month-to-month movement in terms of the number of people who were employed part time as a result of having hours cut and/or being unable to find full-time work, which rose by about 217 thousand over the last month up to 4.21 million.
That increase, while still fairly small as a proportion, represents a significant jump relative to the stability of the past year given that the number of people occupying this category had only risen by a bit more than half that (116 thousand) over the prior 11 months combined.
The number of people who are not currently in the labor force but want a job saw a larger proportional increase, however, with growth of nearly 10% over the year, climbing from 5.16 million to 5.67 million people over the last 12 months.
As for industry growth, the government sector saw the largest share of new payroll entries with the addition of 55 thousand jobs last month, followed by the healthcare and leisure and hospitality industries which both added about 40 thousand new jobs, while the social assistance industry added 21 thousand, and the construction and retail industries each added 17 thousand to their ranks.
The professional and business services industry saw a small amount of growth (+ 13 thousand) but in practical effect its job numbers month-to-month were essentially unchanged, alongside the mining, manufacturing, wholesale, oil and gas production, and financial activities industries.
Average hourly earnings rose last month by about 15 cents up to $34.27 per hour. Over the course of the year, hourly earnings are up a little over 4%.
The average workweek dropped by one-tenth of a point to 34.3 hours per week.
The beginning of this year feels very much like the beginning of last year in many ways, and we can only hope we get similar results.
At the end of last year, there was a considerable amount of speculation that the US economy would experience some significant turbulence over the course of the year, and while the labor market has certainly softened somewhat, forecasts of anything close to recession clearly have not come to fruition.
Currently, there are still plenty of indicators that economic perils may yet await on the road ahead, and some additional labor market softening would seem to be almost certainly in store especially given that the cumulative effect of the Federal Reserve’s interest rate hiking campaign has likely not yet had its peak impact.
That said, it would be hard to make the case that recession looks more likely to occur now at the outset of 2024 than it did at the outset of last year.
Even though 2023 had the benefit of being kicked off by an unseasonably warm January on the heels of an unseasonably cold December which provided an economic boost that 2024 is unlikely to match, we still seem prepared to start the new year in a comparably strong economic position.
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