- Jobs gains in January were remarkably strong as employers added 353,000 new jobs.
- The unemployment rate remained low at 3.7% and has now been at or below 4% for two years.
- The January data does have some blemishes, but the labor market is entering 2024 on very solid footing.
If the dominant labor market narrative in 2023 was slow and steady moderation, then 2024 began fast and furious. Employment gains not only blew past expectations in January, but a host of revisions to 2023 data shows last year was slightly stronger than initially believed. The gains in January were also broad-based — almost two-thirds (65.6%) of industries added jobs or held steady in January, the highest level since January 2023. Wage growth also ticked up after several months of slowing growth, though some of the increase might be the result of pay bumps for auto workers in the wake of the UAW strike. But while the headline data contains many great signs for job seekers and workers, some indicators are at least flashing yellow. Still, this is an undeniably great start to 2024, and hopefully represents a strong foundation to build on over the year.
As with the past few reports, some data underneath the hood may suggest weakness behind the scenes. Employers usually cut back on hours before they slow hiring, and average weekly hours worked declined in January to the lowest level since March 2020, and are below the average level from the three years prior to the pandemic. The share of workers that were employed part-time for economic reasons continued to rise, suggesting ongoing caution from employers to expand headcount too much. The employment-to-population ratio did increase over the month, but after declining in late 2023, still has not returned to last year’s peak level (60.4%).
The recent uptick in wage growth may raise some concerns at the Fed that inflation could prove more stubborn than anticipated (even as other metrics show a more sustained slowdown), but let’s put these caveats aside. The labor market is strong. The unemployment rate has been at or below 4% for two years. The share of people ages 25 to 54 with a job is higher than what it was in 2019. This labor market isn’t perfect, but we appreciate what we have.