A Cooler Jobs Report Points to a Slackening Labor Market
A Cooler Jobs Report Points to a Slackening Labor Market
Exactly as we predicted, the February Jobs Report reversed earlier indications of an accelerating labor market and instead showed a market that continues its gradual cooldown.
Blockbuster figures for December and January were revised downwards, and the unemployment rate jumped to 3.9%. The average work week was just 34.3 hours, which is the bottom end of the range one typically sees during economic good times and suggests that labor utilization is fairly modest.
The report is consistent with data from the JOLTS report earlier this week showing that rates of hiring and quits are below pre-pandemic rates, and with anecdotal evidence from the Fed’s March 6 Beige Book pointing to a slacker labor market with improved labor availability and retention.
The Good News
The best news in the report was the uptick in the prime-age employment-population ratio to 80.7, with gains for both men (from 86.2 to 86.3) and women (75.0 to 75.2). The 4.3% YoY wage growth figure was also good news for workers, who saw 25 straight months of real wage declines in 2021 and 2022 when inflation skyrocketed, but have now seen real wage growth return since May.
The strong wage growth number, which is well above the latest YoY CPI inflation rate of 3.1%, is not necessarily bad news for employers or for inflation, however. That is because productivity growth has been so strong lately.
The Bad News
One puzzling figure in the report was the -4K change in manufacturing employment. Despite massive public investments in domestic manufacturing construction since the pandemic, manufacturing employment has been flat as a pancake for the past 18 months.
The most recent tech sector employment figures released with today’s Jobs Report data were also weak and suggest that the “techcession” is still not behind us, despite the recent stock market rally.
Take a closer look at the Jobs Report data through our dashboard of data visualizations.
