If the books on your current reading list aren’t giving you the drama you need, this month’s jobs report might come in handy.
The report, released Friday, caused a stir as job gains fell below expectations and a revision complicated matters. Luckily, we’re here to help you read between the lines. Let’s take a closer look.
Diving into the data. Employers added just 143,000 jobs in January, falling short of economists’ expectations. The slowdown was not too surprising, Rajesh Namboothiry, SVP at Manpower US, told HR Brew, as employers posted fewer job openings in December, foretelling a pull back on hiring plans.
But the slower job gains aren’t necessarily a reason to panic, especially as other metrics show some signs of a stabilizing labor market.
“The top line number of payroll gains actually isn’t what one should focus on, because how many jobs you need depends so heavily on how many people there are. So I think it’s more important to look at labor-market slack,” Julia Pollak, ZipRecruiter’s chief economist, said. (Labor-market slack refers to the amount of unused resources in the economy, such as the number of unemployed workers.) These metrics in the January data suggest a tighter labor market than originally thought, she noted.
The unemployment rate fell slightly to 4.0%, while the employment population ratio for those aged 25 to 54 rose to 80.7, nearing its recent high of 80.9 in September 2024.
About that revision… Each February, the BLS posts revisions to its job gains data from the past year, and updates how labor force data is weighted based on new population estimates from the Census Bureau. The changes can make the January jobs report somewhat confusing to parse. This year, in particular, updated methodology from the Census Bureau, intended to better capture population growth from immigration, could cause certain metrics in the January report to look bigger, while revised job growth could look much smaller.
For the revised monthly payroll changes, job gains in 2024 were 236,000 lower than originally reported, though December and November gains were upwardly revised by 51,000 to 307,000 and by 49,000 to 261,000, respectively.
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The BLS also updated its revision estimates for job growth for the 12 months ending in March 2024. Employers added 598,000 fewer jobs than originally reported in the monthly reports, instead of the negative 818,000 revision reported in August.
“A big question for a while has been, why is there this massive gap between employment measured in the household survey and in the establishment survey?... Everyone wondered, was job growth slower than the payroll report suggests, or was the employment growth stronger?” Pollak said. “These revisions today suggest both [are] the truth, there are actually many more people in the United States due to immigration and more people in the workforce, but there were also fewer jobs created each month.”
Zoom out. While the big-picture data shows some strength, how recruiters will approach hiring in the months ahead will vary widely depending on the sector.
By industry, job gains—or lack thereof—tell a complicated story. Healthcare added 44,000 jobs in January, once again leading in employment growth. Meanwhile, white-collar industries—including administrative and support services and management, scientific, and technical consulting services, and production industries including mining, quarrying, and oil and gas extraction and transportation equipment manufacturing—lost jobs.
“HR and TA professionals are facing completely different challenges depending on which industries they’re in,” Pollak said. “It’s not just one playbook here, one economy. It’s a real mix.”
If you are in the market to hire, Namboothiry said now is a good time to start building the capabilities needed to stay competitive.
“Start to think about what might be on the horizon for you from a transformation perspective,” he said. “Look at the skill sets you would need two to three quarters from now…You will have to make sure that there’s this added incentive you offer, in upskilling programs or certification or training or pathways, but this is the time to hire strong talent.”