A Cooling Labor Market Still Warm
Jobless claims fell and private payrolls jumped more than expected signaling that the cooling labor market is still relatively warm to close out 2023.
- Seasonally adjusted initial claims were 202,000 to end 2023, a decrease of 18,000 from the previous week’s revised level and the lowest level since mid-October.
- Economists had expected claims to fall slightly to 216k
Continuing Claims. Seasonally adjusted insured unemployment fell to 1.855M for the week ending December 23rd, a decrease of 31,000 from the previous week’s revised level but still in line with the level we have seen the last two months.
Payrolls. Private payrolls jumped 164,000 to close out the year, higher than November’s 101k and the best month since August.
- Better Than Expected. Economists had projected a smaller 115k increase.
- Below Average. While the jobs report was better than expected it still remained below the 200k average that we saw in 2023.
Leisure & Hospitality. Leisure and hospitality had the best the December with 59,000 new jobs followed by education/health services (42k) and construction (+24k).
- On the flip side, manufacturing shed 13,0000 jobs in December along with natural resources/mining (-2k) and information (-2k).
Regional Divide. The West and the Northeast were the only regions to create jobs in December with 109,000 and 94,0000, respectively. Meanwhile, the Midwest (-21k) and the South (-7K) shed jobs in the final month of 2023.
Analysis. Nela Richardson, chief economist at ADP, says we are retrunign to a more normalized labor market. “We’re returning to a labor market that’s very much aligned with pre-pandemic hiring. While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”
BOTTOM LINE: The labor market is cooling but not as fast as we may have thought. Rates are also likely to stay hotter than expected as well.
