The labor market showed steadiness in hiring last month with the economy adding 143,000 jobs in January. The numbers for November and December were revised up by 50,000 each, leading to a combined higher employment gain than reported originally, of 100,000 across those two months. Employment growth was spread across health care, retail trade and social assistance. Monthly employment gains in 2024 averaged 166,000, so this month is marginally below trend.
However, it’s important to not focus too much on one month’s report and to remember that the true picture of the labor market comes from looking across several key indicators.
Here are some key metrics to track where some are showing improvements over time and others a marginal deterioration:
Unemployment Rate: The unemployment rate edged down to 4 percent. This is still up from 3.7 percent a year ago. Across demographic groups, men and women had unemployment rates of 3.7 percent. However, there were larger differences across white workers (3.5 percent), black workers (6.2 percent) and Hispanic workers (4.8 percent).
Number of Unemployed: The number of unemployed is currently at 6.8 million, compared with 6.1 million one year ago. Within this group, those unemployed for longer than 27 weeks (long-term unemployed) is at 1.4 million. This is up from 1.3 million a year ago. The long-term unemployed comprise 21 percent of all unemployed.
Labor Force Participation: LFP is currently at 62.6 percent, which is lower than it was before COVID. In February 2020, LFP was 63.3 percent.
U-6 rate: This rate captures three categories of people (1) total unemployed; (2) all persons marginally attached to the workforce (wanting work but have not looked for work in the previous four weeks); and (3) total employed part time for economic reasons (people who prefer full-time work but have settled for part-time work). The U-6 rate is at 7.5 percent up from 7.2 percent a year ago. During COVID, in April 2020, this was at 22.9 percent.
Wage Growth: Average hourly earnings have increased by 4.1 percent year on year. With inflation at 2.9 percent, this suggests workers are seeing real wages growing.
This snapshot suggests that while the labor market appears decently healthy, there are still pockets of opportunity.
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