The GSI Labor Market Forecast March 2024-1

U.S. employment is expected to increase by 226,000 jobs

KEY TAKEAWAY: Employment in the U.S. is forecasted to continue to rise in March 2024 by 226,000 jobs while the unemployment rate is expected to remain at 3.9%. 
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Econ Corner - Employment Forecast
Econ Corner - Unemployment Forecast
Econ Corner - Unemployment Claims
Econ Corner - Unemployment Applicants
Econ Corner - Job Openings

Employment 

  • Our Expectations: Despite revisions made in December and January that showed job creation was less than originally reported, employment numbers completed February showing the best 3-month performance since the period of April-June 2023. Our expectation is that employment growth will slow down but will continue to add jobs at a slower pace in March, indicating that businesses are still looking to expand but more gradually.

  • Diving in: The average weekly working hours have decreased slightly compared to the same period last year, and the real wages experienced a decline in February, marking the first decrease since September 2023, both of which indicate a slowdown in the labor market. However, it is possible that strong employment gains are the key to maintaining the current positive momentum of the labor market.

 

Unemployment Outlook 

  • Breaking it Down: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, rose slightly to 7.3% in February, up from 7.2% in January. The narrower U-3 unemployment rate, which indicates only the number of unemployed people actively seeking a job, increased from 3.7% in January to 3.9% in February. 

  • What Does This Mean?: The rise in both the U-3 and U-6 unemployment rates, along with an unchanged labor force participation rate, indicates a weakening labor market, which is different from what the employment numbers suggest.

  • Why it Matters: Typically, the surveys for employment and the unemployment rate show similar patterns in the labor market. However, over the last several months, they have been showing different trends. One possible explanation is that the labor department is using Census data that is underestimating population growth. This, in turn, leads to lower calculations of employment levels in the household survey. Nevertheless, the mixed signals are contributing to the uncertainty that the Federal Reserve is facing in determining the path of interest rates throughout 2024.


Key Indicators 

  • What We're Watching: There are three main factors that are contributing to the predicted decrease in job creation and a steady rate of unemployment. These factors include the number of monthly job openings, job applicants, and the number of unemployment claims filed. Data from Geographic Solutions' and the U.S. Department of Labor during the March survey period shows the following:
     
    1. The number of job openings decreased by 9.1%
    2. The number of applicants declined by 14.2%
    3. The total amount of unemployment claims increased by 1.2%

    Analyzing these figures helps to paints a clearer picture of what to expect from the upcoming labor market report. Based on the numbers we can expect to see a slowdown in the labor market in March.  

Employment & Unemployment Forecast

The chart above tracks the national employment forecasts for Geographic Solutions, The Wall Street Journal, and ADP Private Payroll. Geographic Solutions is represented by the horizontal red line to the right.

The unemployment rate measures the percentage of the labor force that is currently without a job. The national unemployment rate has remained steady throughout 2023 and now into 2024, fluctuating between 3.7% and 3.8%. 

NEW ECON CORNER HEADERS
What can we expect from this month's upcoming labor report?

According to our forecast, the labor market is expected to add 226,000 jobs in March. Although there will be an increase in employment, we anticipate that the growth rate will slow down. However, businesses will continue to add jobs at a slower pace, indicating their intention to expand more gradually.

 

With there being so many layoffs happening across different sectors, how will that impact the upcoming report?

Although mass layoffs in large companies can grab headlines in the news, their impact on the labor market is often not reflected in the overall employment numbers. This is because layoffs tend to occur over a period of months or years, rather than immediately after the company announces them. This makes it difficult to recognize their impact in the macro data.

With the youngest of the boomer generation turning 60 and on the verge of retirement, what will this mean for the economy and labor market? How will it reshape it?
Filling job vacancies for entry-level and early-career positions has become more challenging since the pandemic, and as this younger cohort moves up the career ladder, filling mid-level and senior positions may also become more difficult.

Geographic Solutions derives its employment forecast and unemployment rate forecast from internal data on the number of job openings, searchers, and employment and unemployment applications filed on Geographic Solutions' state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).

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