Monthly Market Commentary

February 1st, 2023

Labor Market Update

Philip Blancato, Chief Market Strategist, Advisor Group

This morning the U.S Bureau of Labor Statistics released the January Employment Situation Summary, better known as the Jobs Report. This was a blowout number and starts off 2023 with surprisingly strong job creation.

Payrolls and Unemployment: Total nonfarm payroll employment rose by 517,000 in January, smashing consensus estimates of 188,000. Well above the monthly average gain of 401,000 seen in 2022. The unemployment rate dipped slightly from 3.5% to 3.4%, and while that represents a small decline, the new number matches a 54-year low last seen in 1969.1

Wages and Hours Worked: Job gains were widespread by industry, led by leisure and hospitality, professional and business services, and health care. Notably, workers saw better wages and more hours, as the average hourly earnings rose to 4.4%, and hours expanded +0.3 to 34.7 hours in January. 1

Temp Jobs and Participation Rates: Temp jobs increased by 26,000, seeing their biggest gain since February 2022. Labor Force Participation also supplied good news 62.4%, the highest we’ve seen since March of last year. Similarly, the prime aged labor force participation rate (25-54 years old) rose to 82.7, its highest level since November 2019. 1

Initial Jobless Claims and JOLTS: Weekly initial jobless claims released on Thursday fell to 183,000 for the week ending January 28, representing the lowest print since April 2022. In Wednesday’s JOLTS report we learned job openings rose to a five-month high of 11 million in December, while quits remained above 4 million for the 19th month in a row. Despite media reports of major layoffs at prominent companies, 6.2 million people were hired in December compared to 1.5 million who were laid off. To look at that another way, for each person laid off, 4 people were hired. 1

Takeaway: Digesting this data supports the notion that strength in the labor market persists. Unemployment is at all-time lows, job openings, a gauge of labor market health, remain near all-time highs, while diminished savings, and wages are enticing workers back into the workforce, as hinted at by the participation rate. Quits, which provide insights into a worker’s confidence to seek out better higher paying opportunities, remain elevated. With the resiliency of the labor market continuing, this signals that the Federal Reserve should again hike rates further in their March meeting. However, it also signals that we have a better chance of achieving a soft landing as the labor market remains quite strong. 1

Charts 1 and 2:1


Economic Definitions

Employment Situation Summary (Jobs Report): The Employment Situation Summary released by the US Bureau of Labor Statistics is a report that presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.

Nonfarm Payrolls: This indicator measures the number of employees on business payrolls. It is also sometimes referred to as establishment survey employment to distinguish it from the household survey measure of employment.

Initial Jobless Claims: Initial unemployment claims track the number of people who have filed jobless claims for the first time during the specified period with the appropriate government labor office. This number represents an inflow of people receiving unemployment benefits.

Job Openings – JOLTS: This concept tracks the number of specific job openings in an economy. Job vacancies generally include either newly created or unoccupied positions (or those that are about to become vacant) where an employer is taking specific actions to fill these positions.

Unemployment Rate: The unemployment rate tracks the number of unemployed persons as a percentage of the labor force (the total number of employed plus unemployed). These figures generally come from a household labor force survey.

Federal Reserve (Fed): The Federal Reserve System is the central banking system of the United States of America


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1 https://www.bls.gov/news.release

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