Boca Raton, FL – NCCI recently released its Quarterly Economics Briefing report for the third quarter of 2023, which details the evolution of the labor market development in 2023 and why NCCI remains positive about the labor market and the economy heading into 2024.
Key findings included:
- Employers added 2.7 million jobs in 2023, a significant slowdown from 2021 and 2022’s growth but still a good gain for a “normal” labor market.
- Employment growth was concentrated in two private sector industry groups (education and healthcare, and leisure and hospitality) in 2023. However, this appears to reflect uneven rates of recovery from the pandemic rather than a sign of serious labor market weakness.
- Cumulative payroll growth in workers compensation from the onset of the pandemic through 2023 has been above the pre-pandemic trend due to elevated wage growth, despite the steep 2020 recession. Wage growth will likely continue to drive workers compensation payroll growth throughout 2024.
On the surface, the December employment report released in early January looked strong. Headline job growth of 216,000 is a robust figure that exceeded the Bloomberg consensus estimate of 170,000. The unemployment rate held steady at 3.7% and average hourly earnings surprised to the upside, growing 0.4% month over month and 4.1% year over year, relative to expectations of 0.3% and 3.9%, respectively.
However, there were also potential causes for concern. Some commentators focused on revisions to previous months, which lowered November net job gains from the initial estimate of 199,000 to 173,000 and October from 150,000 to 105,000, a cumulative decrease of 71,000 jobs from initial estimates. Additionally, job growth was concentrated in particular types of work in 2023. Three economic sectors accounted for over 80% of the net job growth for the year, calling into question the breadth of the labor market’s strength.
In its January Labor Market Insights report, NCCI remained upbeat about the health of the labor market following the December employment report. In this paper, they will discuss the reasons for its relatively favorable view, detailing the evolution of the labor market in 2023 and why they remain positive on the labor market and the economy heading into 2024.
The report is authored by Executive Director & Senior Economist Stephen Cooper, and Economists Patrick Coate and Yariv Fadlon.
Read the free report: NCCI Q4 2023 Quarterly Economics Briefing (PDF)