US job growth rebounded in January

By Jing Fu

Job growth rebounded in January. After declines for five consecutive months, total nonfarm payroll employment increased by 517,000 in the first month of 2023 and the unemployment rate hit a 53-year low at 3.4% as more people entered the labor market.

Construction industry employment (both residential and non-residential) totaled 7.9 million and exceeds its February 2020 level. Residential construction gained 5,500 jobs, while non-residential construction employment gained 19,300 jobs in January. Residential construction employment exceeds its level in February 2020, while 96% of non-residential construction jobs lost in March and April 2020 have now been recovered.

Total nonfarm payroll employment increased by 517,000 in January, following a gain of 260,000 in December, as reported in the Employment Situation Summary. It marks the largest monthly job gain in six months. The estimates for the previous two months were revised upward. The estimate for November was revised up by 34,000 from +256,000 to +290,000, while the December increase was revised up by 37,000, from +223,000 to +260,000.

The unemployment rate edged down to 3.4% in January, the lowest level since 1969. The number of employed persons increased by 894,000.

Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, edged up 0.1 percentage point to 62.4% in January, reflecting the increase in the number of persons in the labor force (+866,000). Moreover, the labor force participation rate for people who aged between 25 and 54 increased to 82.7%. Both of these two rates are still below their pre-pandemic levels in the beginning of 2020, and are not fully recovered from the COVID-19 pandemic.

In January, job gains were broad-based, led by gains in leisure and hospitality (+128,000), professional and business services (+82,000), and health care (+58,000).

Employment in the overall construction sector rose by 25,000 in January, following a 26,000 gain in December. Residential construction gained 5,500 jobs, while non-residential construction employment gained 19,300 jobs in December.

Residential construction employment now stands at 3.3 million in January, broken down as 934,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 6,100 a month. Over the last 12 months, home builders and remodelers added 114,600 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,282,900 positions.

In January, the unemployment rate for construction workers ticked up by 0.1 percentage point to 4.4% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic.