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February 4, 2024
2 Min Read
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Headlines from last Wednesday included "Private Payroll Growth Slowed to Just 107,000 in January, Below Expectations" and "US Hiring and Wage Growth Slowed in January."
Headlines from last Friday, just two days later, included "Jobs Report Today: Hiring Surges Past Expectations" and "Another Shockingly Good Jobs Report."
How can two sets of headlines, just two days apart, be so different? They were two different reports, the first being the ADP report of private payrolls and the second being the Bureau of Labor Statistics payroll report. They never line up exactly, but both attempt to gauge the strength of the labor market.
Labor market reality check
The real question: How is the labor market really doing? As we have discussed in the past, if you are reading this you are probably working in the plastics industry and are more concerned about the state of jobs in the manufacturing sector than in healthcare, hospitality, or retail.
What about manufacturing?
Manufacturing saw an increase of 23,000 jobs in January, which was not bad for that sector. That is three consecutive months of gains, for a total of 56,000 new jobs over that period. Do we have enough data points to establish a clear trend line? Eh, not yet.
The Institute for Supply Management’s (ISM) Purchasing Managers’ Index, something we follow very closely, came in at 49.1% in January, up from 47.4% in December. We are not above 50% yet, which would indicate growth, but the numbers were buoyed by new orders at 52.5%, up 5.5 percentage points from December.
New cycle or head fake?
Timothy Fiore of ISM said, "I think we’re probably in the beginning of a demand growth cycle. We’re waking up and we’re ready to start running again."
We will know in a few months whether this was the start of a new cycle or a head fake, but for those who will be hiring in 2024, and who remember how hard that was a year ago, it might be better to be a bit early than a bit late.
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