Signs of a significant weakening are now being seen in the US jobs market

While the US jobs market continues to appear relatively robust, a deeper look at December's data reveals several signs that point to material weakness emerging.

Executive summary

• While overall nonfarm payroll growth remains relatively solid and the unemployment rate remains relatively low, a thorough analysis continues to show that the strength of the US jobs market continues to moderate.

• In addition to the gradual moderation in strength that has been seen over many months, some signs of more material weakness were also seen in December.

• Key points to consider, include:

  • While the unemployment rate remained at 3.7%, household survey employment plunged — only a significant drop in the participation rate kept the unemployment rate stable.

  • While still recording relatively solid growth, in light of significant downward revisions to prior nonfarm payrolls, 3-month moving average nonfarm payroll growth fell to its lowest level since January 2021.

  • Further still, overall nonfarm payroll growth continues to be propped up by government payrolls, with 6-month moving average growth rising again in December, resulting in growth remaining at levels that haven’t b…