Jobs Report: Lots of Noise and Fewer Jobs Over Time
This month’s jobs report is noisy as all get out, with lots of revisions plus the effects of wildfires and cold weather dampening hiring. But the bottom line is that what we’ve been saying all along is starting to show up in the data: there really aren’t as many jobs out there as there used to be.
But first, the top line numbers. The Bureau of Labor Statistics reported the addition of 143,000 jobs to non-farm payrolls in January. The unemployment rate was 4%. Prior to the report’s release, economists polled by Reuters were predicting the addition of 170,000 jobs to public and private payrolls.
Comparisons between this month’s report and previous reports are complicated by the labor department’s annual revisions, which rolled out today. The revisions update data for the previous year according to the Quarterly Census of Employment and Wages (QCEW), which tracks jobs covered by unemployment insurance.
All told, the revisions show about 20,000 fewer jobs created per month last year than originally tallied and 589,000 fewer jobs added in 2023 and early 2024.
Moving forward, predicting job growth will be complicated by the Trump Administration and Elon Musk’s plan to cut government jobs. Government has been one of the few resilient sectors over the past few months, so economists will have to take those job losses–and follow-on effects in other industries–into account when estimating future job growth.
What Experts Are Saying
“US private sector hiring is slowing despite revisions and natural disasters. Job seekers are feeling the pain, with the average length of unemployment close to a record high since the pandemic. However, wage growth was strong for those with a job. Average hourly earnings rose 4.1% y-o-y, complicating the Federal Reserve's policy outlook.” –Kenny Lee, Senior Economist at StreetEasy and Zillow, on LinkedIn
“The big annual revision to the payroll figures was large, but not quite as big as the preliminary figures suggested it would be. Employers added about 600,000 fewer jobs in 2023 and early 2024 than initially reported. The preliminary estimate had suggested a downward revision of more than 800,000 jobs.” –Ben Casselman, The New York Times
“At first glance, this might look like a slowdown in hiring, but that’s not the whole story. Part of what’s happening is a recalibration of past data. The government’s annual revisions, which adjust payroll figures to reflect more complete records, show that job growth in 2023 was weaker than previously believed. Last year, job growth averaged 166,000 per month, rather than the 186,000 initially reported. That’s a notable downward revision, suggesting that while the labor market remained resilient, it wasn’t as robust as we once thought.” –Thomas J Thompson, Chief Economist at Havas, Entrepreneur in Residence at Harvard, on LinkedIn
“The overall read on the labor market today is: continued strength. There are many countervailing factors in the data for January, from numerous revision types to wildfires and winter weather. These things make the story the data tells difficult to parse, and it’s best to examine the new release as a snapshot, rather than a comparison to prior months.” –Elizabeth Renter, Senior Economist at NerdWallet, on LinkedIn
“Taken with the revisions to average hourly earnings from prior months, the 4.1 percent year-over-year jump doesn’t look like an acceleration, but rather a slight dip from the 4.2 percent in October and November. Overall the picture is of consistently strong wage growth — and the fact that it’s been matched by impressive productivity growth means that it’s less of a concern for inflation..” –Lydia DePillis, The New York Times
Just Give Me the Data, Please
The Employment Situation Summary by the numbers:
Total nonfarm employment: 143,000
Unemployment rate: 4%
Long-term unemployed: 1.4 million
Labor force participation rate: 62.6%
Employment-population ratio: 60.1%
People employed part-time for economic reasons: 4.5 million
Average hourly earnings: 17 cents (0.5%) to $35.87
Industries that added jobs:
Healthcare (+44,000 jobs)
Retail trade (+34,000 jobs)
Social assistance (+22,000 jobs)
Government (+32,000)
Industry that lost jobs:
Mining, quarrying, and oil and gas extraction (-8,000 jobs)
Industries that remained flat:
Construction
Manufacturing
Wholesale trade
Transportation and warehousing
Information,
Financial activities
Professional and business services
Leisure and hospitality
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