Friday, February 3, 2023

January jobs report: like a sports car at maximum acceleration


 - by New Deal democrat

My focus on this report was on whether manufacturing and construction jobs turned negative or not, and whether the deceleration apparent in job growth would continue.

Both of those were answered emphatically in the negative. Here’s my in depth synopsis.

  • 517,000 jobs added. Private sector jobs increased 443,000. Government jobs increased by 74,000. The three month moving average of growth increased sharply to 356,000, over a 100,000 jump.
  • The alternate, and more volatile measure in the household report had 2nd very positive month in a row, increasing by 894,000 jobs. The above household number factors into the unemployment and underemployment rates below.
  • U3 unemployment rate declined -0.1% to 3.4%.
  • U6 underemployment rate rose 0.1% to 6.6%.
Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and will help us gauge whether the strong rebound from the pandemic will continue.  These tilted to the negative:
  • the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, reversed December’s decline and increased +0.3 hours to 40.9, although it remains down -0.7 hours from its February peak last year of 41.6 hours.
  • Manufacturing jobs increased 17,000.
  • Construction jobs increased 25,000.
  • Residential construction jobs, which are even more leading, increased by only 100.
  • Temporary jobs, which for the last several months were declining, reversed course and rose by 25,900.
  • the number of people unemployed for 5 weeks or less declined -287,000 to 1,946,000, the lowest for the entire last 50 years except for 3 months in 2019.

Wages of non-managerial workers
  • Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.06, or +0.2%, to $28.26, a YoY gain of 5.1%, the lowest gain since June 2021.

Aggregate hours and wages: 
  • the index of aggregate hours worked for non-managerial workers increased by a sharp1.0%, which is near a record for the past 60 years, and has only been exceeded by 3 months since 1995, all of which were earlier in the pandemic rebound.
  •  the index of aggregate payrolls for non-managerial workers also increased sharply by 1.3%, and rebounded to up 9.2% YoY. This metric had been decelerating nominally almost consistently for the prior 16 months.

Other significant data:
  • Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 128,000, and have improved to -3.1% below their pre-pandemic peak.
  • Within the leisure and hospitality sector, food and drink establishments added 98,600 jobs, and are now only -1.3% below their pre-pandemic peak. 
  • Professional and business employment rose 82,000.
  • Full time jobs increased 278,000 in the household report.
  • Part time jobs increased 606,000 in the household report.
  • The number of job holders who were part time for economic reasons rose 172,000.
  • The Labor Force Participation Rate increased 0.1% to 62.4%, vs. 63.4% in February 2020.
  • Those not in the labor force at all, but who want a job now, increased 138,000 to 5.314 million, compared with 4.996 million in February 2020.
  • November was revised upward by 34,000, and December was also revised upward by 37,000, for a net increase of 71,000 jobs compared with previous reports. 

Finally, both the Establishment and Household report data for 2022 was revised this month. 

In the Household report, total population was adjusted upward by 954,000, and employment by 810,000. Other metrics had little or no change.

In the Establishment report, almost all months in 2022 were revised higher, with the exception of January, April and May. The net effect was an increase of 813,000 jobs in 2022, with relatively weaker growth in Q2, but stronger growth in the other 3 Quarters.


This report could be likened to a sports car accelerating at maximum thrust. Almost everything was extremely positive. The only negative was the increase in involuntary part-time employment, which translated into a slight increase in the underemployment rate.

Everything else was positive, including all the leading indicators which I had been looking to weaken. In fact, some metrics were so positive that they make me think that some Holiday seasonality worked its way into the numbers. In particular, the 74,000 increase in government jobs was one of the strongest ever outside of census hiring every 10 years. Leisure and hospitality hiring was also among the strongest in the past 50 years outside of 2021, and food and drink hiring was the strongest ever aside from the immediate post-pandemic reopening through 2021.

Needless to say, in almost all sectors the pandemic losses have been completely recovered. As I indicated above, the universal sharp increases make me think that there was some unresolved seasonality in play. In particular, the return to bigger hiring in manufacturing contradicts every other measure of manufacturing in the past few months.

So I’ll celebrate this month’s report, but with a lingering suspicion that it is going to prove an outlier.