The U.S. labor market has been on a tear since the economy bounced back from the pandemic, with employers adding 5.6 million jobs since the start of 2022 alone. Despite a wave of layoffs in technology and finance, many employers have kept hiring through the highest inflation in 40 years and the fastest pace of interest-rate increases since the 1980s.
Recent banking-industry turmoil added another economic risk and raises the question: Is the long-resilient labor market about to slip?
The Labor Department will release its March jobs report on Friday, coming on the heels of surprisingly robust job growth in January and February. Broad-based job figures are an important economic gauge but can lag behind other labor-market indicators.
Here are signals to track for early clues on shifts in labor-market momentum:
Quitter Confidence
A smaller share of workers are handing in resignations this year than in April 2022, when the percentage of workers quitting their jobs matched a record high of 3%. The gradual decline in quitting indicates that workers are a bit less confident in their ability to job hop than they were a year ago.
More workers could stay put in the coming months because of concerns about the recent banking turmoil, which might make it harder to get a loan. “When job seekers are worried about the future outlook they do become less likely to quit their current jobs, even if they’re unhappy in them,” said Julia Pollak, chief economist at ZipRecruiter.
Shorter Hours
Average weekly hours among all private-sector workers have gradually fallen since the beginning of 2021. Friday’s jobs report will show whether that trend continued.
The decline in hours could indicate that companies no longer need to squeeze as much work out of each employee, with labor shortages easing. It could also suggest that businesses are growing cautious. In the face of uncertainty and weakening demand, companies often trim hours before they lay off workers.
Jobless Claims
Worker filings for weekly unemployment benefits help signal whether layoffs are picking up across the economy. Weekly claims have risen recently, in a sign of easing demand for workers as the labor market slowly cools.
Claims remain near historical lows, but reached nearly 250,000 a week in mid-March before declining to 228,000 in the week ended April 1, the Labor Department said Thursday. The 2019 prepandemic average was about 220,000. The increase in claims this year points to more layoffs in industries such as technology, finance and real estate.
A Wonky Index
Keep an eye on the diffusion index, a gauge of broad-based job gains and losses across industries. The index is part of the Labor Department’s monthly jobs report. A reading above 50 means more private industries gained jobs than lost them in a given month, while a reading below 50 means more industries cut jobs than added them.
The February diffusion index showed more industries were growing than shrinking. But it fell to its lowest level since April 2020, when the pandemic triggered widespread layoffs across the economy. Further declines in the index could signal that the labor-market slowdown is spreading far beyond job cuts in technology and finance.
Hiring Engine
Watch hiring trends in the auto industry, one of the most interest-rate-sensitive business sectors in part because many consumers take out a loan when purchasing a vehicle. Auto manufacturers have added workers at nearly three times the pace of all employers over the past year. Their outsize hiring reflects an effort to catch up with pent-up demand after shortages of semiconductor chips kept inventories of new cars at low levels.
Now, U.S. auto-industry sales are starting to rebound as more cars and trucks come available on dealership lots. But that sales momentum could wane. Higher interest rates and inflationary pressures have made vehicles a lot more expensive. And financial turmoil could mean fewer auto loans. That in turn could lead to less hiring of auto workers.
Online Job Postings
Real-time job-postings data from employment websites such as Indeed.com and ZipRecruiter offer timely clues about employers’ future hiring intentions. Some economists say that companies, in response to slowing sales and heightened uncertainty, will pull down job postings without laying off workers. Such a phenomenon could help the U.S. labor market achieve a soft landing, a situation in which inflation comes down without a painful recession.
Source: www.wsj.com
