Is The U.S. Jobs Market Weaker Than It Looks? Here Are Some Hints.

By Jeffry Bartash

Unemployment has risen and finding a job takes longer

The U.S. has averaged a respectable 173,000 new jobs a month since September, in a sign the labor market is still pretty healthy - but warning signs are flashing.

Those warning signs include rising unemployment, longer job searches and a smaller percentage of adults either working or looking for work.

Most of the trouble is showing up in a survey of households, one of two measures the government uses to track the health of the jobs market. The household survey is less accurate in the short run, it should be noted. Still, some potentially worrisome trends are developing.

Let's start with the unemployment rate: It moved up to 4.2% in November, from 4.1%. And it was just a whisper away from matching a three-year high of 4.3%, if rounding is taken into account.

Just a year and a half ago, the unemployment rate was 3.4%.

"This should be more than enough evidence for Federal Reserve officials to conclude the job market is softening and cut [interest rates] in December," wrote economists Andrew Hollenhorst and Veronica Clark of Citibank in a note to clients.

What's surprising is that the rate rose even though more people dropped out of the labor force, an outcome that typically brings down the jobless rate. People who aren't looking for work are not counted as unemployed.

Comerica Chief Economist Bill Adams said the decline in participation "means the unemployment rate understates how much the job market is softening."

Another negative trend is a decline in the percentage of prime-age workers, from 25 to 54, with a job. That rate has fallen by almost half a percentage point since the summer, to 80.9%.

What's more, after a person loses a job, it's taking them longer to find a new one. The length of time people are unemployed has risen to the highest level since the end of 2021.

"Those who do lose their jobs struggle to find new work as hiring has been curbed," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Worrisome trends, to be sure - but the economy is still adding a decent number of new jobs each month, layoffs are near a historic bottom and the unemployment rate also remains unusually low.

"The economy isn't going gangbusters like it was immediately after the pandemic lockdowns ended, but we're on solid ground," contended Sean Snaith, director of the University of Central Florida Institute for Economic Forecasting.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-07-24 0658ET

Copyright (c) 2024 Dow Jones & Company, Inc.

Public link

Please use the above public link if you want to share this noodl on another website.