Hiring accelerates in early 2024

April 5, 2024

Payroll employment rose by 303,000, after being revised up over the previous two months by 22,000. The three and six-month moving averages on employment have now risen to 276,000 to 244,000 in the first quarter, respectively; that compares to 212,000 and 213,000 for those same figures in the fourth quarter. Much of the gains were supply driven, buoyed by a catch-up in immigration. The labor force grew by 469,000 workers in March, the strongest monthly pace since August 2023.

Public sector payrolls surged 71,000, driven by the ongoing increase in hiring at the state and local levels, where government coffers are still flush with cash; 46 of 50 state exceeded their revenue expectations last year; the majority expect to do so again in 2024. Job openings outside of education at the state and local levels surged at the end of February. Job gains in March were spread between those in and outside of education. Compensation in the public sector picked up faster than it did in the private sector in the second half of last year, which has enabled it to compete more directly with private sector employers.

Private sector job gains came in at 232,000, up from 207,000 in February and 196,000 in January. Gains were once again dominated by a jump in hiring in healthcare and social assistance. Next up was leisure and hospitality, which increased by 49,000, mostly in food services. Hiring in the big three – healthcare and social services, leisure and hospitality and the public sector (largely state and local governments) accounted for two-thirds of total gains, a little less than the average we saw in the second half of 2023. Employment gains have become slightly more dispersed as employment picked up in early 2024.

Construction rose by 39,000. That is almost double the 19,000 monthly average of the last 12 months. Gains were concentrated in specialty contractors for commercial construction. Retail added 18,000 jobs, trucking added 5,000, while warehousing shed jobs for the month. Online spending has slowed from the pace we saw during the height of the pandemic and the initial reopening. Manufacturing was unchanged, with gains in motor vehicle and parts production offsetting a drop in nondurable goods production.

Average hourly earnings were up 0.3% in March, after rising an upwardly revised 0.2% in February. That translates to a 4.1% increase from a year ago, a slight slowdown from the 4.3% we saw in February. However, that slowdown was offset by an increase in hours worked, which moved up to 34.4 hours. Average weekly earnings rose 0.6% during the month, after rising 0.5% in February. The gains increased 4.1% from a year ago, after rising 3.7% last month. That is more growth in incomes for people to keep spending buoyant in March.

Separately, the household survey reported a slight drop in the unemployment rate to 3.8% in March, from 3.9% in February. Participation in the labor force rose by 0.2% to 62.7%, the highest rate since November, and the second highest of the recovery. Prime-age participation fell slightly, with fewer men participating than last month. The prime-age participation among women held at February levels in March, which were close to the record set in 2023. The increase in overall participation was driven by a bounce back participation by Black teens, which suffered an unusual setback in February. The move up in March is more of a return to normal.

The household survey had been running much cooler than the payroll survey, which prompted many to worry that payrolls would be revised down significantly a year from now. However, employment in the household survey surged by nearly half a million workers, the fastest pace since November. That meant all the increase in the labor force was absorbed into those who could work; over the last two months, foreign-born workers increased their employment by 1.27 million; native-born increased their employment by 435,000 over the two months. Foreign-born workers tend to participate at higher rates than native-born workers, as most people come to the US to work and feed their families.

The ranks of the unemployed fell to 6.43 million, the lowest since January. We hit a cyclical low of 5.7 million in December 2022.

People out due to other family or personal obligations (e.g., elder care) hit a record at 430,000; the next closest month was 390,000 in November 2021, when outbreaks due to COVID were still elevated. Those out due to childcare issues and parental leave remained elevated, along with those out on vacation. March is a month when a lot of people travel due to spring breaks; the data are seasonally adjusted.

Multiple job holders rose to 8.5 million, close to the record hit in December 2023, and above the pre-pandemic level of February 2020. Those working voluntarily part-time surged to 22.9 million, a new record. Many see that as a sign of economic strength, as it includes people who scaled back their hours to go on vacation. However, the definition of voluntary part-time work also includes people who work part-time because they are caring for children or other people in their family. Almost all of the surge in participation by women in the workforce was driven by college-educated women who have children under three years old; those with a high-school degree or less are not participating as much and, according to a separate study by ADP, are working one hour less per week than they were pre-pandemic. That reflects the ongoing crisis and high costs of childcare.