Despite a recent uptick in layoffs, the unemployment rate remains near historic lows. Wage growth increased to the highest level since September 2023, another sign the labor market was hotter than we thought in January.
January's report kicks off 2024 with a bang. A theme toward the end of 2023 was job growth concentrated in a few industries. This month's report shows more widespread growth, which will be a welcome sign for job seekers and businesses alike.
It's not Groundhog Day for the jobs report
Today (February 2) may be Groundhog Day, but not for this jobs report.
Over the past several month's we settled into a pattern - job gains exceed expectations, but previous months' totals are revised downward. That's not what happened this month.
U.S. businesses added 353,000 new jobs in January, beating projections of around 180,000. And more good news - job gains for November and December 2023 were revised upward by a total of 126,000 jobs. Those revisions bring 2023 job gains to over 3 million, the highest since 1999 (excluding the pandemic recovery in 2021 and 2022).
With just one month of data, it's hard to proclaim a trend for 2024; but another bright spot in January's jobs report is related to industries. Over the past several months, job gains have been concentrated in a few industries - Government, Healthcare, and Leisure and Hospitality. In January, more sectors added jobs, including Professional and Business Services, which suffered job losses in the second half of 2023.
📊 Job gains
The 353,000 new jobs added in January, combined with upward revisions, suggest the labor market may be hotter than we thought. There's not a lot, if any, bad news in this report. But there are some caveats worth noting.
January's job gains exceeded expectations; but the number could be, at least partially, the result of seasonal patterns disrupted by the pandemic. Even if there are substantial downward revisions, job gains were strong in January. We saw a similar pattern in 2023 with job gains near 500K in January before settling in the 230,000 range for the remainder of the year.
🏭 Industries
Throughout the second half of 2023, job gains were concentrated in just a few industries. January's jobs report shows much more widespread growth with nearly eight in ten industries and subsectors adding jobs last month.
Perhaps the best news is Professional and Business Services adding 74,000 jobs in January, the most of any industry following a sluggish 2023. And even better news for recruiters - the temporary employment and staffing subsector added jobs for the first time in nearly two years.
💼 Unemployment rate
Once again, the unemployment rate held steady at 3.7%. We've had an unemployment rate below 4% for two straight years.
We've seen high profile layoffs and hiring freezes in tech. Strong demand from other sectors means job seekers may need to look to other industries for new opportunities, and businesses who are hiring can look to the tech industry for talent.
💸 Wages and compensation
Wage growth ticked up more than expected in January. Average hourly earnings grew by 4.5% over the past 12 months, up from 4.1% in December. An increase in wages is good news for workers, but businesses will need to keep an eye on this number to ensure compensation is competitive to attract and retain talent.
For those watching what the Fed is going to do with interest rates, stronger than expected job and wage growth likely point to fewer (and more delayed) interest rate reductions in 2024.
