by paul gomme and peter rupert
The BLS announced that the establishment survey revealed a 143,000 increase in employment in January, 111,000 of that came from private payrolls. Moreover, all of the private employment increase came from the service sector as the goods producing sector had a net of zero. November was revised up by 49,000 and December by 51,000.
Average hours worked in January fell to 34.1 hours. Apart from the pandemic, the last time it was 34.1 was back in April of 2010. With the 111,000 increase in private employment and the reduction in average hours of work, total hours worked also fell.
Average hourly earnings for private workers rose 0.5% over the month (5.9% on an annual basis). Using various inflation measures, real hourly earnings have been steadily rising over the past couple of years.
The household survey indicated that the labor force participation rate increased from 62.5% to 62.6% and the employment to population ratio increased from 60.0% to 60.1%. The unemployment rate fell from 4.08% to 4.01%.
An article in the New York Times suggested that the jobs report would be “confusing” due to massive revisions owing to an annual process that reconciles the differences between the establishment and household surveys. Our reading: not so much. There was no revision to the household survey employment numbers. While establishment survey employment was revised down some 610,000 as of December 2024, the level of employment was around 159 million. While 610,000 would be a massive change on a monthly basis, that’s not the right way to think about the revision since the revisions are spread over many months. A better way to think about the revision: the level of employment in December was revised down roughly 0.4%. The figure below shows substantial downward revisions in January and March 2024, and similarly large upward revisions for November and December.
On Tuesday, the BLS released the job openings and labor turnover summary (JOLTS). The job openings rate fell somewhat but hires and separations changed little.
On Thursday, the BLS released data on productivity and costs. Growth in productivity fell from 2.3% in 2024Q3 to 1.2% in 2024Q4. Most of this decline can be attributed to a fall in output growth (from 3.6% to 2.3%). Growth in hours worked also fell, from 1.3% to 1.0%.
The labor market, as always, has some ups and downs in the underlying components. Job growth was so-so and both the labor force participation rate and employment to population ratio rose. Average hourly earnings show strong growth. However, average hours of work and total hours fell as did productivity. These reports do not really alter the “wait and see” approach outlined by the FOMC after their recent meeting.