1Michael Feroli (1-212) 834-5523michael.e.feroli@jpmorgan.comJPMorgan Chase Bank NADaniel Silver (1-212) 622-6039daniel.a.silver@jpmorgan.comMurat Tasci (1-212) 622-0288murat.tasci@jpmchase.comNorth America Economic ResearchGlobal Data Watch05 January 2024J P M O R G A NJob growth still solidNonfarm employment beat expectations in December, increasing 216,000, although after downward revisions of 71,000 to prior months the level of employment came in close to what was anticipated. There were also mixed messages from the other details of the report. In the establishment sur-vey, average hourly earnings increased a solid 0.4%, but the average workweek ticked down to 34.3 hours. In the house-hold survey, the unemployment rate held unchanged at a low 3.7%, but the labor force participation rate slumped three-tenths to 62.5% and the volatile household measure of employment plunged 683,000.3.03.54.04.55.05.56.06.5100200300400500600700800202120222023000s, sa, 3m avg. changeFigure 1: Nonfarm employment and average hourly earnings%3m/3m, saarSource: BLS, J.P. MorganEmploymentAveragehourlyearningsStepping back, labor demand has been gradually cooling. Job growth averaged 165,000 in the fourth quarter, the weakest quarter of the expansion though still above what�s required to meet the growth in the population (Figure 1). Similarly, wag-es grew at a 3.7% annual rate last quarter, the weakest pace since late 2020 though still probably a little too hot from a labor cost and inflation perspective.123424681012140005101520Mn, sa, both scalesFigure 2: Job openings and layoffsSource: BLS, J.P. MorganLayoffsOpeningsThe more lagging JOLTS data also suggest that labor demand is cooling but remaining solid. Job openings continued their recent downward trend into November. But while the number of job openings has fallen by more than 3mn since the all-time high reported for March 2022, the November level of openings was still up by more than 1mn from the strongest month of 2019 (Figure 2). While hiring has slowed lately, •Job growth was solid in December (216,000) with unemployment rate holding at 3.7%•FOMC minutes suggested rate cuts could come later this year•We continue to think first Fed cut occurs in June•December CPI forecast: headline: 0.2%, core 0.3%We continue to think that the FOMC will start lowering rates in June, with the news from the past week supporting the idea that a rate cut could come fairly soon, but probably not as ear-ly as the first quarter. Most importantly, the December employment report showed solid job growth continuing through the fourth quarter, with a still-tight labor market gen-erating upward pressure on wages. The broad trend in employment growth (and aggregate hours growth and average hourly earnings growth) still appears to be moderating over time, but so far this looks like a shift to a more balanced labor market following the severe effect...
