Weekly Economic Trends and Indicators

The Headline:

On Friday, the Bureau of Labor Statistics (BLS) reported that nonfarm payroll employment increased by 216,000 in December. Unemployment was unchanged at 3.7%, and the labor force participation rate decreased by 0.3 percentage points to 62.5%. While this was higher job growth than expected, some previous months were revised downward which offset the higher numbers for December.

This news comes on the heels of Thursday’s ADP National Employment Report, an independent report produced by ADP, showing an increase of 164,000 jobs. According to ADP, leisure and hospitality employment increased by 59,000 jobs, and manufacturing decreased by 13,000 jobs.

The Details:

Private education and health services added the most jobs (74,000). Half of that number was in health care with most of the rest in social assistance. Government added 52,000 jobs, mostly in local government. Manufacturing was essentially unchanged.

In a separate release, the BLS reported that employment in the Quad Cities metro area increased by 1,000 jobs from November 2022 to November 2023. This represents approximately 0.5 percent job growth over the last year. This growth rate was near the median among metro areas in both Illinois and Iowa. Locally, manufacturing jobs were essentially unchanged between October and November, while jobs in trade, transportation and utilities increased by 1,200 over the same period.

The Context:

Friday’s employment report provided evidence that the economy is still quite strong. Furthermore, wage growth was 0.4% in December, which continues to reflect uncomfortably high levels of inflation.

While the net job growth numbers often get the most attention, it is useful to combine this data with the Job Openings and Labor Turnover Survey (JOLTS) for additional context. Nationally, job openings were essentially unchanged at 8.8 million in November while both total hires and total separations decreased. Job openings peaked in March 2022 and are now at their lowest level since March 2021.

The decline in job openings and hires show that the job market may be a little softer than the overall employment report would indicate. Among separations, both quits and layoffs were down, but quits were down by a larger number. This indicates that many workers sense that the market is cooling and are more reluctant to leave their current job.

Interestingly, job openings were up in the Midwest—the only region of the country to see an increase in November. Manufacturing job openings and hires were up nationally from October to November, indicating that the pause in interest rate increases may be providing some relief.

Next week: Inflation update