Last Friday (December 8, 2023), the U.S. Bureau of Labor Statistics (BLS) released the latest labor market data— Employment Status Summary – November 2023 – This represents an increase in employment of 199,000, which is a good sign. The unemployment rate also fell – from 3.9% to 3.7% – as employment growth outpaced labor force growth. The participation rate rose 0.1 percentage points, showing optimism among workers. I see no signs of a major slowdown. Real wages have also begun to rise slightly.
November 2023 Overview (Seasonally Adjusted):
- Wage employment increased by 199,000 (from 150,000 last month).
- Total Labor Force Survey employment increased net by 747,000 (0.46%).
- The net increase in the labor force was 532,000 (0.32%).
- The participation rate increased by 0.1 percentage points to 62.8%.
- The total statistical unemployment rate dropped by 215,000 to 6.291 million.
- The official unemployment rate fell 0.2 percentage points to 3.7%.
- The broad labor underutilization indicator (U6) fell by 0.2 percentage points to 7%.
- The employment-to-population ratio rose 0.3 percentage points to 60.5% (still well below the June 2020 peak of 61.2).
For those who are confused about the difference between wage (establishment) data and household survey data, you should read this blog post – U.S. labor market conditions are worrying – I explain the differences in detail.
Some months the difference is smaller, and some months the difference is larger.
Salary Employment Trends
The Bureau of Labor Statistics states:
Nonfarm employment increased by 199,000 in November. Job growth was lower than the average monthly rate of 240,000 jobs over the past 12 months, but consistent with job growth in recent months…
The healthcare industry added 77,000 jobs in November, above the 54,000 monthly average over the past 12 months…
Government employment increased by 49,000 in November, consistent with the average monthly increase of 55,000 in the previous 12 months…
Manufacturing employment increased by 28,000 in November…and there was almost no net change in manufacturing employment for the year.
Leisure and hospitality employment continued its upward trend in November (+40,000)… Over the past 12 months, the leisure and hospitality industry has added an average of 51,000 jobs per month.
Social assistance employment continued to trend upward in November (+16,000)…Personal and family services employment continued to trend upward this month (+9,000).
Retail employment fell by 38,000 in November, with little net change for the year.
Information industry employment was little changed in November (+10,000)… Overall, information industry employment has declined by 104,000 since its peak in November 2022.
Transportation and warehousing employment was little changed in November (-5,000)… Transportation and warehousing employment has declined by 61,000 since its peak in October 2022.
Employment in other major industries was little changed this month…
All in all, monthly job growth is now about pre-pandemic levels as the U.S. labor market adjusts to a new normal.
The first graph shows monthly changes in wage employment (in thousands, expressed as a 3-month moving average to remove monthly noise). The red line is the annual average. Observations between March 2020 and March 2022 were excluded as outliers.
The average line (without excluding outliers) gives you an idea of the extent of the economic slowdown in the two years before the COVID-19 outbreak.
The next graph shows the same data in a different way – in this case it shows the average monthly net change in wage employment (real) over the calendar years 2005 to 2023.
The red marks on the columns are the results for the current month.
Average monthly change – 2019-2023 (000s)
| Year | Average monthly employment change (000s) |
| 2019 | 163 |
| 2020 | -774 |
| 2021 | 606 |
| 2022 | Chapter 399 |
| 2023 (present) | Chapter 232 |
Labor Force Survey Data – Strong Employment Growth
Seasonally adjusted data for November 2023 shows:
1. Total Labor Force Survey employment increased net by 747,000 (0.46%) – a considerable reversal from the previous month.
2. The net increase in labor force was 532,000 (0.32%) – reversing the sharp decline last month.
3. The participation rate increased by 0.1 percentage points to 62.8%.
4. As a result (from an accounting perspective), the total measured unemployment rate fell by 215,000 to 6.291 million – a good sign, especially as the participation rate improves.
5. The official unemployment rate fell by 0.2 percentage points to 3.7%.
I noted last month that I suspected some of the results released last month, which suggested the economy was slowing, were due to sampling.
This month's results show no sign that a severe recession is imminent.
The chart below shows monthly job growth since January 2008 and excludes extreme observations (outliers) from March 2020 to March 2022 that distort the current period relative to the pre-pandemic period Case.
The employment-to-population ratio is a good indicator of labor market strength because the denominator, population, is not particularly sensitive to cycles (unlike the labor force), so changes are relatively clear-cut.
The chart below shows the U.S. employed population from January 1950 to November 2023.
In September 2023, the ratio increased by 0.3 percentage points to 60.5%.
The peak in September 2020 before the outbreak was 61.1%.
Trends in unemployment and underutilization
The U.S. Bureau of Labor Statistics states:
The unemployment rate dropped slightly to 3.7% in November, and the number of unemployed people did not change much, reaching 6.3 million. …
The number of long-term unemployed (those unemployed for 27 weeks or more) fell slightly to 1.2 million in November. These people account for 18.3% of all unemployed people…
In November, the number of people working part-time due to economic factors decreased by 295,000 to 4 million. These are people who would have preferred full-time employment but are working part-time due to reduced hours or the inability to find full-time employment.
The first chart shows the official unemployment rate since January 1994.
The official unemployment rate is narrow Measures of labor waste, which means strict comparisons with the 1960s, such as the tightness of the labor market, must take into account broader measures of labor underutilization.
The figure below shows the BLS metric U6, which is defined as:
Total unemployment plus all marginally dependent workers plus total employment held part-time for economic reasons as a percentage of all civilian labor force plus all marginally dependent workers.
As such, this is the broadest quantitative measure of labor underutilization published by the Bureau of Labor Statistics.
Before the COVID-19 outbreak, the proportion of U6 was 6.8% (January 2019).
In September 2023, the U6 indicator was 7%, down 0.2 percentage points – partly due to a fall in the unemployment rate, but also due to a fall in the underemployment rate.
How are wages growing in the United States?
The U.S. Bureau of Labor Statistics report states:
Average hourly earnings for all private nonfarm workers rose 12 cents, or 0.4%, to $34.10 in November. Average hourly earnings increased 4.0% over the past 12 months. Average hourly wages for private-sector production and non-managerial workers increased 12 cents, or 0.4 percent, to $29.30 in November.
Still no sign of wage breakthrough!
However, real wage gains are a good sign.
Newest – U.S. Bureau of Labor Statistics (BLS) Actual Earnings Summary – September 2023 (Published November 14, 2023) —Tell us:
On a seasonally adjusted basis, real average hourly earnings for all workers increased by 0.2% from September to October… This result was driven by a 0.2% increase in average hourly earnings, while the Consumer Price Index (CPI – U) No change.
Real average weekly earnings fell 0.1% from the previous quarter due to changes in real average hourly earnings combined with a 0.3% decrease in the average workweek.
From October 2022 to October 2023, real average hourly earnings increased by 0.8% on a seasonally adjusted basis…
So, with inflation falling fairly quickly, nominal wage growth now allows for modest increases in real wages.
The table below shows the movement in nominal average hourly earnings (AHE) by industry and inflation-adjusted AHE by industry in September 2023 (note that we are using CPI in October (the latest available data) Adjustment).
Real wages in all industries increased this month, with only four industries seeing real wages decrease compared with the same period last year.
The chart below shows the annual growth rate of real average hourly earnings from 2008 to November 2023.
Another indicator that tells us whether the labor market is turning in favor of workers is the turnover rate.
The latest data from the U.S. Bureau of Labor Statistics (BLS)—— Job vacancies and labor mobility summary (Published December 5, 2023)—Indicates:
On the last working day of October, the number of job vacancies fell to 8.7 million… During the month, the total number of hirings and separations
Little change, 5.9 million and 5.6 million respectively. There was little change in separations, resignations (3.6 million) and layoffs and layoffs (1.6 million)…In October, there was little change in the number of people quitting smoking, at 3.6 million, and the quitting rate was 2.3% for the fourth consecutive month.
Therefore, in October 2023, the dynamics of the U.S. labor market are quite stable.
in conclusion
Latest monthly data shows employment increased by 199,000, which is a good sign
The unemployment rate also fell – from 3.9% to 3.7% – as employment growth outpaced labor force growth.
The participation rate rose 0.1 percentage points, showing optimism among workers.
I see no signs of a major slowdown.
Real wages have also begun to rise slightly.
That's enough for today!
(c) Copyright 2023 William Mitchell. all rights reserved.
