Red Flags Diminish Enthusiasm Over December Employment Numbers

Craig Bannister | January 5, 2024
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Red flags dampened enthusiasm over December’s job growth, which increased more than expected, and the unchanged unemployment rate, data released Friday by the U.S. Bureau of Labor Statistics (BLS) show.

While total nonfarm payroll employment increased by 216,000 from November, more than the 170,000 expected, the growth was lower than that of past months.

Payroll employment rose by 2.7 million in 2023 (an average monthly gain of 225,000), less than the increase of 4.8 million in 2022. 2022’s average monthly gain of 399,000 is 183,000 higher than December’s increase.

Comparisons of December to previous months were improved by downward revisions to October and November.

The change in total nonfarm payroll employment for October was revised down by 45,000, from +150,000 to +105,000, and the change for November was revised down by 26,000, from +199,000 to +173,000. With these revisions, employment in October and November combined is 71,000 lower than previously reported.

Likewise, the unemployment rate remained at a seasonally-adjusted 3.7% in December, but was above the 3.5% level of a year ago (December 2022). December’s number of unemployed persons was 6.3 million, unchanged from November, but higher than year-ago, when 600,000 fewer people were unemployed (5.7 million).

The December report contains some significant red flags:

  • The number of people who were employed fell, from 161.9 million in November to 161.2 million.
  • The number of people who want a job rose, from 5.3 million to 5.7 million.
  • There were fewer people actually in the work force (167.5 million, down from 168.1 million).
  • The employment-population ratio suffered a steep 0.3 percentage point decline, to 60.1%.
  • The labor force participation rate also fell by 0.3 to 62.5%.
  • The number of people not in the labor force who currently want a job rose to 5.7 million in December, from 5.3 million in November, and was up by 514,000 over the year. These individuals were not counted as unemployed, so they did not increase the unemployment rate.

 

What’s more, rising employment in government accounted for a quarter (24%) of December’s job growth. Government, leisure/hospitality, and health care comprised 60% of 216,000 jobs added:

  • Government employment increased by 52,000 in December. Government added an average of 56,000 jobs per month in 2023, more than double the average monthly gain of 23,000 in 2022.
  • Employment in leisure and hospitality increased 40,000.
  • Health care added 38,000 jobs, as employment in ambulatory health care services (+19,000) and hospitals (+15,000) continued to trend up.
  • Employment in social assistance rose by 21,000 in December, mostly in individual and family services (+17,000).

 

Meanwhile, employment in transportation and warehousing declined by 23,000 in December. Since reaching a peak in October 2022, employment in transportation and warehousing has decreased by 100,000.

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.3 hours in December.

Among the major demographic groups, the unemployment rate rose for adult women, Whites and Hispanics, but fell for other cohorts, compared to November:

  • Adult men 3.5, down from 3.7%.
  • Adult women: 3.3, up from 3.1%.
  • Teenagers 11.9, down from 11.4%.
  • Whites: 3.5, up from 3.3%.
  • Blacks: 5.2, down from 5.8%.
  • Asians: 3.1, down from 3.5%.
  • Hispanics: 5.0, up from 4.6%.

 

The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.

GLOSSARY

Employed: BLS defines employed Americans as those who, during the reference week, did some work for pay or profit, or did at least 15 hours of unpaid work in a family-operated business.

Unemployed: People with no job, but who are looking for employment.

Participating in the labor force: People who were either employed or unemployed -- they either had a job or were actively looking for one during the last month.

People not in the labor force who want a job: These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.

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