Plastics Unemployment Remains Low Amid Moderate February Job Gains

Perc Pineda, PhD
Chief Economist, PLASTICS

There are indications of a slowdown in job growth, as noted by the Federal Reserve in its statement after the latest Federal Open Market Committee Meeting on January 30-31, 2024. Companies are showing signs of weaker job growth momentum, with notable examples such as Cisco Systems and Estée Lauder planning to cut 5.0% of their workforce, and United Parcel Service planning to cut about 12,000 jobs (Wall Street Journal, February 27, 2024). Additionally, quit rates, a key indicator of employee confidence in seeking new opportunities, have been on a decline since 2022. In January of this year, the quit rate was 2.1%, down from 2.5% a year earlier and 3.0% two years prior. 

There are indications of a slowdown in job growth, as noted by the Federal Reserve in its statement after the latest Federal Open Market Committee Meeting on January 30-31, 2024. Companies are showing signs of weaker job growth momentum, with notable examples such as Cisco Systems and Estée Lauder planning to cut 5.0% of their workforce, and United Parcel Service planning to cut about 12,000 jobs (Wall Street Journal, February 27, 2024). Additionally, quit rates, a key indicator of employee confidence in seeking new opportunities, have been on a decline since 2022. In January of this year, the quit rate was 2.1%, down from 2.5% a year earlier and 3.0% two years prior. 

February job market overview 

The U.S. unemployment rate increased to 3.9% in February from January’s 3.7%, despite the addition of 275,000 nonfarm payrolls. The service-providing sector added 204,000 jobs, surpassing the goods-producing sector’s 19,000, with a decline of 4,000 jobs in manufacturing. The February jobs report by the Bureau of Labor Statistics (BLS) includes downward revisions in nonfarm payrolls for December 2023 and January 2024, indicating that employment is 167,000 lower than initially reported. While new jobs are being created, the number of unemployed individuals rose by 334,000 from January to February and nearly half a million (496,000) from February 2023. 

Against this backdrop, the unemployment rate in plastics and rubber products manufacturing decreased to 2.2% in February from 5.6% in January. Despite the 3.4 percentage points decrease in unemployment, the BLS estimates a loss of 300 jobs in the plastics and rubber products manufacturing sector in February, following the increase of 2,700 jobs in January. 

Economic realities  

Employment stands as the primary income source for most consumers, and any surge in unemployment typically signals a decline in consumption, particularly in discretionary spending. The U.S. Bureau of Economic Analysis reported a notable 1.0% increase in personal income for January, the highest since the 1.1% uptick observed in July 2021. However, monthly growth in personal income remains modest. Disposable personal income, which accounts for taxes, saw a meager 0.3% monthly increase, unchanged from the previous month when adjusting for inflation. Notably, inflation-adjusted consumption experienced a 0.1% decrease in January. 

A moderation in the job growth rate, lower employment quit rates, and a higher level of unemployment may have significant implications for personal income and consumption. Such trends, especially assuming that inflation continues to decrease, could align with the early stages of potential cuts in the Fed funds interest rate.