Thomas Barwick | Digitalvision | Getty Photographs
1. Unemployment is at historic lows
The unemployment fee fell to three.4% in January — the bottom since Might 1969. Put one other approach: The final time the jobless fee was this low, Neil Armstrong hadn’t but walked on the moon, Bunker mentioned.
In truth, you’d have to return to October 1953 to discover a decrease unemployment fee — 3.1%.
The unemployment fee is a single-best labor market indicator for the common American — it affords a holistic take a look at its power or weak spot and a dependable gauge for potential recession, mentioned Daniel Zhao, lead economist at Glassdoor, a profession website.
“The job market remains to be sturdy, and staff have alternatives to exit and discover a job that is a greater match for them,” Zhao mentioned.
U.S. employers added 517,000 new jobs in January, handily beating expectations. They added 4.8 million complete jobs in 2022, greater than twice the roughly 2.3 million common from 2015 to 2019, mentioned Julia Pollak, chief economist at ZipRecruiter.
2. Layoffs are low regardless of Massive Tech
Massive know-how corporations — similar to Amazon, Google, Meta and Microsoft — introduced mass layoffs in latest weeks. These job cuts, which have an effect on tens of hundreds of staff, prompted fears the carnage would spill over into different areas of the U.S. economic system.
Nevertheless, that does not appear to be taking place.
“The factor that strikes me essentially the most concerning the labor market is there aren’t layoffs,” mentioned Mark Zandi, chief economist at Moody’s Analytics.
The layoff fee has stayed beneath its pre-pandemic nadir for 22 straight months, in line with Job Openings and Labor Turnover Survey information. Employees filed 183,000 new claims for unemployment insurance coverage final week — properly beneath the roughly 245,000 common from 2015 to 2019, in line with Labor Division information.
“That’s simply knock-your-socks-off low,” Zandi mentioned of unemployment claims.
Companies are reluctant to put off staff and the labor market is powerful sufficient to quickly take up individuals who do lose their jobs, Zandi mentioned.
Tech jobs additionally account for a small share of the U.S. workforce: about 4% of complete employment in 2020, in line with a Deloitte report revealed in 2021.
3. The ‘nice resignation’ chugs alongside
Employees are nonetheless quitting their jobs in traditionally elevated numbers.
Most staff who stop achieve this for brand new jobs; they do not depart the workforce altogether. Voluntary departures are due to this fact a proxy for employee confidence — they’re optimistic about their probabilities of discovering a greater job elsewhere, economists mentioned.
About 4.1 million individuals stop in December, in line with JOLTS information issued Wednesday.
That determine is a slight cooling from the height of over 4.5 million in November 2021 — however nonetheless properly above the pre-pandemic excessive bar of three.6 million set in July 2019.
The elevated stage of quitting within the pandemic period got here to be often called the “nice resignation.” In 2022, 50.5 million individuals stop their jobs — breaking an annual file set in 2021.
4. Hiring has moderated
Hiring stays sturdy however has been decelerating. The hiring fee and variety of new hires have cooled since February 2022; they’re roughly on par with their stage in February 2020.
That is not essentially a nasty signal — the job market was additionally sturdy within the runup to the pandemic.
Companies are adjusting to greater rates of interest and the prospects of recession — not essentially by way of mass layoffs however as an alternative by hiring much less aggressively, Zandi mentioned. Knowledge suggests employers are permitting jobs vacated by quitting staff to go unfilled, he mentioned.
5. Wage progress is excessive however cooling
Wages are rising at a traditionally quick tempo — particularly for these switching jobs. However there is a cooling pattern right here, too.
Wages and salaries for private-sector staff grew about 4% within the fourth quarter of 2022, on an annualized foundation — above the pre-pandemic tempo however down from 6% on the finish of 2021, Bunker mentioned. He analyzed Employment Value Index information issued Tuesday and excluded incentive-paid occupations, which will be risky.
“The slowdown is definitively right here,” Bunker mentioned of wage progress.
Common hourly earnings in January cooled to a 4.4% annual progress fee, in line with Friday’s jobs report, falling from 4.6% in December and 5.1% in November.
“It will not be as straightforward as we speak because it was a 12 months in the past to discover a higher-paying job,” Zhao mentioned. “However there are nonetheless alternatives on the market.”
6. The labor market is ‘out of steadiness’
This cooling in pay progress is by design. The Federal Reserve is aiming to cut back wage progress to what it sees as a extra sustainable stage — one that does not gasoline excessive inflation.
Fed Chairman Jerome Powell on Wednesday mentioned the labor market was “very, very sturdy” because of job creation and wages — but in addition famous that it was “out of steadiness.” Largely, that is as a result of labor demand amongst employers “considerably exceeds” the availability of obtainable staff, Powell mentioned, which has underpinned fast-rising wages.
The Fed is attempting to melt the labor market with out triggering a recession — a so-called “delicate touchdown.”
Lowering wage progress to three.5%, as measured by the Employment Value Index, could be per the Fed’s long-term 2% inflation goal, Zandi mentioned.