Job growth lays ahead, but so does a “short and shallow” recession, according to The Conference Board. Its Employment Trends Index rose in December 2023 to a reading of 113.15 from a downwardly revised reading of 112.48 in November.

December’s increase indicated continuing employment growth into this year, Selcuk Eren, senior economist at The Conference Board, said in a press statement. However, a short and shallow recession may still be ahead.

“The index has been on a gradual decline since its peak in March 2022, yet it remains notably above pre-pandemic levels,” Eren said. “This suggests continued job additions in early 2024, albeit at a decelerated pace. We project a short and shallow recession starting in [the first half of] 2024 and negative payroll prints in the second part of the year.”

Eren noted that the labor market continues to add jobs as most CEOs said they expect to continue hiring or keep their existing workforce. Only 13% expect to cut workers within the next 12 months.

“However, over the past six months, payroll gains have been predominantly driven by healthcare and social assistance, leisure and hospitality, and government. It is unlikely that gains in these sectors alone can keep payroll positive going forward,” he said. “Employment in other industries was either flat or declined slightly. Employment in temporary help services — an early indicator for hiring in other industries and part of the ETI — has been declining since November 2022. Other indicators, including job openings, hirings and voluntary quits, all point to a softening labor market.”

The Conference Board forecast the US unemployment rate to rise to 4.3% by the end of 2024, corresponding with about 600,000 job losses, according to Eren. However, the organization expects the recession to be short-lived and jobs to quickly recover by the end of 2024.

December’s increase in the Employment Trends Index was driven by positive contributions from four of its eight components: percentage of respondents who say they find “jobs hard to get,” initial claims for unemployment insurance, real manufacturing and job openings.