U.S. Job Market Shows Resilience With Higher-Than-Expected Job Additions In February 2024

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The US job market exhibited notable strength in February 2024, adding 275,000 jobs, significantly surpassing the anticipated 200,000 job additions and showcasing a robust labor market dynamics.

This performance marks an upward revision from January’s figure, which was corrected from an initial estimate of 353,000 jobs—the highest in a year—to 229,000 jobs, indicating continued employment growth momentum.

The sector-wise analysis reveals substantial job gains across various industries, highlighting the diverse nature of employment growth. The healthcare sector led with a 67,000 increase, particularly in healthcare services and hospitals. Government employment also saw a significant uptick, adding 52,000 jobs, with local government roles, excluding education, contributing notably.

The food services and drinking places sector rebounded, adding 42,000 jobs after a period of stagnation, while social assistance and transportation and warehousing sectors also reported solid gains. Construction employment continued its positive trend with an addition of 23,000 jobs, though employment remained stable in other major industries such as mining, manufacturing, and financial activities.

The initial claims for unemployment insurance in the week ending March 30 saw a slight increase to 221,000, up by 9,000 from the previous week’s revised level, with the 4-week moving average rising to 214,250. Despite these adjustments, the overall insured unemployment rate maintained a stable 1.2% for the week ending March 23, reflecting steady job security.

The slight decrease in seasonally adjusted insured unemployment to 1,791,000, down by 19,000 from the preceding week, further underscores the labor market’s resilience.

Additionally, unadjusted data indicates a nuanced view of the labor market, with actual initial claims rising modestly and the insured unemployment rate in state programs remaining unchanged at 1.3%.

The market initially reacted positively to the higher-than-expected jobless claims, possibly due to adjustments in the probability of an earlier rate cut. However, the actual negative implications of the data could lead to long liquidations around the highs, potentially reversing the market’s direction.

March 2024 saw a notable uptick in job cut announcements by US-based employers, totaling 90,309, marking the highest figure since January 2023 and representing an increase from 84,638 in February. The surge in job cuts was prominently led by the technology sector, which announced 14,224 reductions, and significantly by the government sector, which disclosed 36,044 job eliminations—its highest monthly total since September 2011. Notably, the cuts in the government sector included significant reductions by the Veterans Affairs (10,000 cuts) and the United States Army (24,000 cuts).

In the first quarter of 2024, companies announced plans to cut 257,254 jobs, showing a slight decrease from 270,416 in the first quarter of 2023 but marking a substantial 120% increase from 117,163 in the fourth quarter of 2023. The primary driver for these job cuts was attributed to “Cost-Cutting,” accounting for 66,302 of the total reductions, with “Restructuring” also cited as a significant reason.

Andy Challenger, senior vice president of Challenger, Gray & Christmas, Inc., highlighted a trend where many companies are adopting a “do more with less” approach amidst these cuts. While the technology sector has been the most affected so far this year, other industries, including energy and industrial manufacturing, are also experiencing an uptick in job cuts compared to the previous year.

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