The US Labor Market Continued Its Strength in January

Commentary on today's U.S. Bureau of Labor Statistics Employment Situation Report

NEW YORK, Feb. 2, 2024 /PRNewswire/ -- Today's jobs report revealed that the US labor market continued to be resilient with a remarkable addition of 353,000 jobs in January, following an upwardly revised 333,000 jobs added in December 2023. Wage growth remained robust as well, with average hourly wages increasing by 4.5% over the past year. Although this marks a decrease from the peak in early 2022, wages are still growing significantly faster than prepandemic rates.

The unemployment rate remained at 3.7% in January, staying under 4% for the 24^th consecutive month, while the labor force participation rate for individuals aged 16 and above remained flat at 62.5%. These figures reaffirm the continued strength of the labor market, aligning with expectations that the Federal Reserve might look for further evidence that inflation is fully under control and wait until June before it implements interest rate reductions.

The three sectors that drove employment gains in the second part of 2023 continued to add jobs in January, with healthcare and social assistance (+100,400), government (+36,000), and leisure and hospitality (+11,000) accounting for 42% of jobs added in the month. Other notable industries that added jobs in January included professional and business services (+74,000), retail trade (+45,200), manufacturing (+23,000), transportation and warehousing (+15,500), information services (+15,000), and construction (+11,000). Temporary help services—often considered a leading indicator for hiring trends—added 3,900 jobs, reversing the declines observed since April 2022. Moreover, revisions to the data revealed that job growth in 2023 was stronger than initially reported, with 359,000 more jobs created than previously estimated. However, revisions for 2022 showed a decrease of 266,000.

One major weakness in today's report was the average weekly hours worked, which declined to 34.1 in January from 34.3 in December, its lowest level since March 2020. The decline in average weekly hours was driven by service-providing industries. They were particularly visible in construction, where average weekly hours declined from 39.2 in December to 38.6 in January, and in retail trade, where average weekly hours fell from 29.8 in December to 29.1 in January—the lowest level ever recorded. This suggests that employers chose to reduce hours rather than resort to layoffs for the moment.

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SOURCE The Conference Board