Despite economists and market analysts promising that 2024 would be the beginning of a labor market slowdown, the Bureau of Labor Statistics (BLS) shocked the world again by delivering gangbuster headline figures in its most recent jobs report. The surface numbers were impressive, but the deeper data painted a different picture of what is occurring across the country.
The January Jobs Report
Last month, the US economy added an eye-popping 353,000 new jobs, up from the revised 333,000 of November. This also topped the consensus estimate of 180,000. The unemployment rate was flat at 3.7%, below economists' expectations of 3.8%. Average hourly earnings rose a better-than-expected 0.6% month-over-month and jumped to 4.5% year-over-year. Yes, real (inflation-adjusted) earnings are still down, but the sudden increase in nominal wages was driven by the month-over-month drop in average weekly hours (34.3 to 34.1). Meanwhile, the labor force participation rate was unchanged at 62.5%. The U-6 unemployment rate, which includes the unemployed, discouraged, and marginally attached workers, swelled to 7.2%.
Indeed, these are numbers that any president running for re-election should be proud of and celebrate daily. However, when economists dig deeper into the non-farm payrolls report, conditions are different.
What Else Is There?
To kick off 2024, the most significant drivers of the employment gains were professional and business services (74,000), health care (70,000), retail (45,000), government (36,000), and social assistance (30,000). Manufacturing also contributed 23,000 positions. These numbers are compelling for two reasons. First, the government accounted for 39% of the job creation. Second, this comes as Challenger data highlighted that US-based employers terminated roughly 83,000 workers last month, and ADP showed the private sector created a little more than 100,000 employees.
As Liberty Nation has reported, there is typically a divergence between the establishment and household surveys in the monthly jobs report. The former includes every job someone has, and the latter removes the duplication of individuals. So, while the establishment component confirmed 353,000 new jobs, the household portion showed 175,000 lost positions.
The BLS showcased another widening gap between full-time and part-time work. Last month, full-time jobs declined by 63,000, and part-time employment opportunities rose by 96,000. Additionally, the number of individuals working two or more jobs eased from an all-time high in December, sliding to a three-month low of 8.272 million.
The one positive was the upward revisions, breaking the six-month streak of downward changes. The December numbers were adjusted higher by an amazing 117,000 to 333,000. Unfortunately, the celebration stops there because it is likely these numbers will be revised downward in the coming months or years. The BLS recently altered the 2023 second-quarter jobs data that revealed the economy only added 332,000 positions, well under the initially reported 603,000. Even when the private sector is factored into the calculations, the government had a little more than 500,000 new jobs in the April-June span. Of course, nobody cares anymore by the time the numbers are fudged.
Election Year Data
Skeptics have questioned the reliability of the BLS’ latest jobs data. Remember, many companies have been laying off scores of their workforce in the past month, such as UPS, Hasbro, and Twitch. So, why would anyone doubt the veracity of government numbers? Well, it is an election year, after all. Zero Hedge said it best: "It's safe to assume that all Establishment Survey numbers are now completely made up." Suffice it to say that none of the figures made much sense. As a result, data users, as the BLS calls anyone who combs through the numbers, should anticipate plenty of revisions in the future. The federal agency certainly puts the BS in BLS.
