February 2024 Jobs Report: A Look at January's Trends

Labor Market Analysis

Hiring dramatically picked up in January with 353,000 jobs added — 317,000 in the private sector and 36,000 in the public sector, according to the U.S. Bureau of Labor Statistics. Looking closer, the professional and business services industry added 74,000 jobs while corporate departments added 3,000 jobs.

For the third month in a row, the unemployment rate held steady at 3.7%. Labor force participation remained at 62.5%, amid a soaring increase in early retirements and large fall in participation between people aged 19–24.

Annual inflation cooled from 3.4% in December to 3.1% in January. Rising shelter costs (which include rent, owners’ equivalent rent costs, and insurance) continue to work against inflation going down. This may be due in part, however, to a lag between older government housing data and robust private sector data, the latter of which indicates rent prices are falling. Higher insurance costs are also a factor driving up shelter prices.

Despite higher interest rates, inflation, declining savings and a cooling labor market, inflation-adjusted consumer spending remains 3.2% more than December 2022, an accelerated rate from recent months showing a stronger consumer spending trend.

Job openings rose to just above 9 million in recent months, which are still significantly higher than pre- pandemic levels. The ratio of unemployed workers per job remained at 0.69, or 1.36 open jobs per unemployed worker. Additionally, potential workers per job opening — including part-timer workers who want full-time work, those who left the labor force but want to work, and the unemployed — dipped below historic levels of 2.0, down to 1.71.

The rate of job quits has seen a downward trend in recent months, with around 3.4 million workers quitting jobs in December — the most current data available — which is just below February 2020’s total quits. This trend is likely a firm indicator of future wage growth slowing, despite it picking back up in January.

Average hourly earnings growth sharply increased with a 0.6% gain month-over-month and a 4.5% increase year-over-year.