Weak Jobs Report Reflects Storms, Strikes, and the Ongoing Labor Market Slowdown
Weak Jobs Report Reflects Storms, Strikes, and the Ongoing Labor Market Slowdown
Today’s weaker-than-expected jobs report not only reflected the effects of storms and strikes, but also of the continued labor market cooldown which has taken place since the Fed began raising interest rates more than two years ago. The report is broadly consistent with the big picture that has emerged over the past two years: a labor market that is growing but slowing, and where growth is increasingly narrowly concentrated.
Far from being a mere blip, the first payroll figure of the fourth quarter (just +12K jobs added overall and 28K private sector job losses) comes on the heels of two quarters in which net job gains have been well below their pre-pandemic average, and all of the job gains have come from just four supersectors that together account for just half of the U.S. workforce. The large decline in temp hiring also foreshadows further cooling.
There is reason to believe that the labor market will rebound at some point in response to normalizing interest rates. Hiring will likely pick up again as borrowing costs ease and businesses invest more easily. But job gains won’t appear everywhere at once. Interest-sensitive sectors—like finance and tech—could feel the boost first. Other sectors may take longer to respond as lending flows unevenly across industries. In time, though, lower rates should help job growth stabilize across the economy and return to pre-pandemic normal.
Already, there is some positive news in today’s report—namely, that holiday hiring is largely on track, although the jobs have continued to shift from traditional retail to ecommerce-related sectors. The pre-pandemic (2015-2019) average September-to-October increase in employment (in data that is not seasonally adjusted) was 146.7K in retail, 23.3K in warehousing and storage, 12.6K in couriers and messengers. Gains this year were 124.7K, 24.0K, and 33.6K respectively—slightly lower in retail but higher in the other two sectors.
Take a tour through the Jobs report in ZipRecruiter charts.
