The labor market continued its winning streak in early 2024. Here are the five things we learned from U.S. economic data released during the week ending February 2.
Payrolls swelled again in January. Nonfarm payrolls grew a seasonally adjusted 353,000, up from December’s 333,000 gain. Private-sector payrolls expanded by 317,000, including 289,000 net additional jobs in the service sector. The goods-producing side of the U.S. economy saw payrolls grow by 28,000. The biggest payroll gains were in health care/social assistance (+100,400), professional/business services (+74,000), and retail (+45,200). Average weekly earnings of $1,178.16 were up 3.0 percent from a year earlier. The average weekly hours worked has fallen a half hour over the past year to 34.1 hours.
The same Bureau of Labor Statistics report indicates that the unemployment and labor force participation rates—based on a separate household survey—each held steady at 3.7 percent and 62.5 percent, respectively. The 25 to 54 labor force participation rate edged up 1/10th of a percentage point to 83.3 percent. More people working part-time desired full-time hours, growing 211,000 to 4.422 million. The median length of unemployment slipped 1/10th of a week to 9.6 weeks. The broadest measure of labor underutilization (the U-6 series) inched up 1/10th of a percentage point to 7.2 percent.
Many unfilled jobs remained unfilled in December. The Bureau of Labor Statistics estimates there were a seasonally adjusted 9.026 million open jobs, up 101,000 from November. While down 19.7 percent from a year earlier, the count of open jobs remained well above the six million average before the pandemic. The private sector had 8.010 million open positions, with health/social assistance and professional/business services, with over a million unfilled jobs each. Employers hired 5.621 million workers in December, up 67,000 for the month but 10.1 percent below year-ago levels. Private-sector employers hired 5.191 million people. 5.365 million departed from their jobs, off 36,000 from November and 9.2 percent from a year earlier. Fewer people voluntarily left their jobs: 3.392 million did so in December, down 132,000 from the prior month and 17.1 percent from December 2022. Conversely, layoff activity has been rising, growing 85,000 to 1.616 million (+9.6 percent versus December 2022).
The Fed does not make a move…yet. The policy statement released following this past week’s Federal Open Market Committee (FOMC) meeting notes a “solid pace” of economic activity, a “strong” if “moderated” pace of job gains, and inflation that “has eased…but remains elevated.” The statement also noted the Fed’s goals of “maximum employment” and two percent inflation. Further, the FOMC “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” As a result, the committee voted unanimously to keep the fed funds target rate at 5.25 – 5.50 percent and to continue reducing its holdings of mortgage-backed Treasury securities.
Consumer sentiment blossomed in January. The Conference Board’s Consumer Confidence Index surged 6.8 points to a seasonally adjusted 114.8 (1985=100). The present conditions index rose 14.1 points to 161.3 and the expectations measure added 1.8 points to 83.8. 22.5 percent of survey respondents viewed current conditions as “good” compared to 14.2 percent who saw them as “bad.” 45.5 percent of consumers indicated that jobs were “plentiful,” well above the 9.8 percent that said they were “hard to get.” The press release linked growing optimism to “slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions.”
The University of Michigan’s Index of Consumer Sentiment jumped 9.3 points to a seasonally adjusted 79.0 (1966Q1=100). The measure was up 21.7 percent from a year earlier and at its highest since July 2021. The current conditions index added 8.6 points to 81.9 (January 2023: 68.5), while the expectations index rose 9.7 points to 77.1. One-year inflation expectations continued to moderate, with consumers expecting prices to rise 2.9 percent over the next year. (As recently as November, survey respondents anticipated a 4.5 percent inflation rate.)
Factory orders edged up in December. New orders for manufactured goods increased 0.2 percent to a seasonally adjusted $594.3 billion. Factory orders totaled $6.995 trillion for the year, placing the Census Bureau measure up a modest 0.8 percent from 2022. Whereas durable goods orders held steady in December, they increased 0.4 percent for nondurables. Shipments grew by less than 0.1 percent to $581.0 billion, leaving their $6.933 trillion total for 2023 just above 2022’s $6.922 trillion total. Unfilled orders swelled 1.2 percent to $1.393 trillion, while inventories expanded 0.1 percent to $857.7 billion.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending January 27, 2024, First-Time Claims, seasonally adjusted): 224,000, +9,000 vs. the previous week, +25,000 vs. the same week a year earlier). 4-week moving average: 207,750 (+4.1% vs. the same week a year earlier).
- Manufacturing PMI (January 2024, Index (>50 Indicates Expansion in Manufacturing): 49.1 (December 2023: 47.1; January 2023: 47.4).
- Construction Spending (December 2023, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.096 trillion (+0.9% vs. November 2023; +13.9% vs. December 2022).
- Vehicle Sales (January 2024, Automobiles and Light Trucks, seasonally adjusted annualized rate): 14.999 million vehicles (-6.9% vs. December 2023; -0.7% vs. January 2023.
- Productivity (2023Q4, Nonfarm Labor Productivity, seasonally adjusted annualized rate): +3.2% vs. 2023Q3; +2.7% vs. 2022Q4.
- FHFA House Price Index (November 2023, Purchase-Only Index, seasonally adjusted): +0.3% vs. October 2023; +6.6% vs. November 2022.
- S&P Case-Shiller Home Price Index (November 2023, National Index, seasonally adjusted): +0.2% vs. October 2022; +5.1% vs. November 2022)
- Agricultural Prices (December 2023, Prices Received by Farmers, not seasonally adjusted): -0.4% vs. November 2023; -17.6% vs. December 2022.
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What We Learned About the U.S. Economy Last Week 