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1. Job development is slowing
The U.S. financial system added 187,000 jobs in August, the Labor Division stated Friday.
Job development is clearly dropping momentum: The three-month common in August was 150,000 jobs added, versus 201,000 in June, for instance, Bunker stated.
However August’s studying was “precisely in line” with the 2015-2019 common of 190,000 a month, stated Julia Pollak, chief economist at ZipRecruiter. And job positive factors in August have been broad-based throughout industries, she stated.
Lat month’s tally was additionally lowered by tens of 1000’s resulting from one-off components like ongoing strikes in Hollywood and trucking-sector layoffs largely driven by the bankruptcy of Yellow Corp., said Aaron Terrazas, chief economist at career site Glassdoor.
Further, monthly job growth still exceeds U.S. population growth, economists said. Estimates on this “neutral” pace vary. Bunker pegs it around 70,000 to 100,000 jobs a month; Terrazas puts it around 150,000.
2. Unemployment is up — but not for bad reasons
The unemployment rate jumped to 3.8% in August from 3.5% in July, the U.S. Labor Department said Friday.
However, that relatively big increase doesn’t seem to be for bad reasons like people losing jobs, economists said. In fact, employment rose in August.
Instead, the jump is largely attributable to an increase in the number of people looking for work, economists said. More people are therefore entering the labor force — which gives the appearance of rising unemployment.
“Although the unemployment rate jumped to an 18-month high of 3.8% … that arguably isn’t quite as alarming as it looks since it was driven by a 736,000 surge in the labour force,” Andrew Hunter, deputy chief U.S. economist at Capital Economics, wrote in a research note Friday.
The rate of labor force participation in August reached its highest level since the start of the Covid-19 pandemic, according to Labor Department data.
That said, it would become worrisome if new entrants to the labor market don’t find jobs quickly and unemployment continues to rise, Pollak said.
Historically, an unemployment rate below 4% is “still consistent with improving labor market conditions for job seekers and workers, even those who have traditionally faced barriers to employment,” Pollak said.
3. The great resignation is over
The pandemic-era trend known as the great resignation is over.
Workers quit their jobs at a historically high rate in 2021 and 2022, attracted by ample job opportunity and higher pay elsewhere. Quits are a proxy of workers’ willingness or ability to leave jobs. Now, quits — as well as the number of new hires made by employers — have fallen back to their pre-pandemic levels.
It’s “exactly where you’d want” these rates to be, Zandi said.
That said, some sectors have seen the quits rate decline noticeably below pre-pandemic levels, suggesting workers feel less confident about their job prospects nowadays.
It’s a numbers game. Apply early and often. Speed really, really, really matters.
Julia Pollak
Chief economist at ZipRecruiter
For example, the quits rate for the leisure and hospitality as well as accommodation and food services sectors are each at 3.9%, “lower than 2019 levels of 4.6% and 4.9%, respectively,” Andrew Patterson, senior economist at Vanguard, wrote in an email.
4. Job openings ‘rapidly’ approaching normal
Job openings — a barometer of employer demand for workers — remain historically high but have been trending downward.
Job openings are “rapidly approaching” their pre-pandemic peak, suggesting “labour market conditions have mostly normalized,” Hunter wrote in a note this week.
5. Wage growth is slowing, but outpaces cost of living
Wage growth has cooled from a pace unseen in decades.
Average three-month growth was 4.5% in August, on an annualized basis, according to a White Home Council of Financial Advisers evaluation of earnings knowledge in Friday’s jobs report. Whereas nonetheless elevated, that is down from 4.9% final month and a peak of 6.4% in January 2022, CEA stated.
There’s excellent news for employees, although: “Actual” wages have lastly flipped optimistic after an extended stretch of declines for the common employee.
Actual wages are web earnings after accounting for will increase in the price of dwelling. On common, inflation had outstripped the expansion in common hourly wages for 2 years, from April 2021 to April 2023, based on Labor Division knowledge. That meant the common employee noticed their dwelling normal erode.
However a mix of falling inflation and comparatively robust wage development has meant a reversal of that development since Might — which means dwelling requirements have begun rising once more.
In July, actual common hourly earnings rose 1.1% from a 12 months earlier, following will increase of 1.3% and 0.2% in June and Might, respectively, based on the Labor Division.
6. Jobseekers must be ‘on their greatest sport’
Whereas the labor market stays robust, jobseekers “must be on their greatest sport” since they not have “unprecedented” leverage when searching for work, Pollak stated.
Employees face extra competitors for open roles, she stated. There are alternatives however they’re going to be a bit tougher to search out, she added.
“It is a numbers sport,” Pollak stated. “Apply early and sometimes. Pace actually, actually, actually issues.”
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