U.S. Annual Unemployment Rate

The extreme labor shortages witnessed over 2021 and 2022 have given way to smaller but more sustainable growth in payrolls.

Healthcare and hospitality positions led the increases in payrolls, adding 85,000 and 58,000 jobs respectively. Manufacturing jobs declined slightly over the same period, while retail, construction, and business services saw modest gains.

The first part of 2024 has been a strong period for jobs. Nonfarm payrolls have so far risen by more than 200,000 jobs per month over the course of the year, with February marking the 38th straight month of job growth. Conversely, the unemployment rate increased from 3.7% to 3.9% over the same period. This

hints at two phenomena: first, an increase in labor force participation, and second, an increase in people moving jobs. Gains in real wages are likely behind both trends: higher wages (and greater flexibility from remote work) have encouraged people to enter the labor market, and also encourage people to move jobs for something better. Economists call this frictional unemployment, or unemployment caused by people leaving one job and finding another.

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