Cracks are beginning to form in the labor market, despite a robust March jobs report, leading market analysts to assert that the recent banking turmoil may be a contributing factor to easing employment growth in coming months.
He noted that the job market is “beginning to flag” several other “lagging indicators of a slowing economic activity and tightening credit” environment.
A wave of recent labor data might support this expectation.
The four-week moving average, which eliminates week-to-week volatility, climbed to 240,000.
Continuing jobless claims, a metric that measures out-of-work individuals who have been receiving jobless benefits for a long time, remained above 1.8 million for the fourth consecutive week.
Because many of these job cuts have been concentrated in the technology sector, experts argue that only pockets of the labor market are weakening.
Indeed, so far this year, tech firms have announced more than 102,000 job cuts, up from just 267 layoffs in the first quarter of 2022, representing an astounding 38,487 percent increase.
Upward Move in Lost Jobs
But Bureau of Labor Statistics (BLS) data show that there has been a declining trend in new jobs or an upward trajectory in lost jobs in multiple sectors.In March 2022, the manufacturing sector created 62,000 new jobs, but the industry lost 1,000 positions a year later.
Likewise, there were 15,000 new positions in the finance space in March 2022, but the arena shed 1,000 people last month.
The same patterns are seen throughout the national economy—such as construction, wholesale trade, information, professional and business services, transportation, and warehousing.
The number of job openings fell below 10 million in February for the first time since May 2021.
Nearly all sectors listed in the Job Openings and Labor Turnover (JOLT) report recorded a reduction in new jobs from the previous year.
“Certain job types are still seeing higher levels of unemployment currently. For instance, construction jobs have very high unemployment numbers right now due to building activity slowdown, with higher interest rates lowering demand for new individual housing,” Jill Gonzalez, a WalletHub analyst, said in a note.
“Farming, fishing, and forestry jobs are also seeing high unemployment, which has more to do with technological advances and less about the current economy or pandemic recovery.”
However, a Morning Consult study found that SMBs are beginning to experience a hiring slowdown in the aftermath of the Silicon Valley Bank and Signature Bank failures.
With tighter credit conditions coming, SMBs plan to slow their hiring as they grapple with a diverse array of challenging market developments.
“Larger SMBs are most exposed to tighter financial conditions, while smaller SMBs are more likely to struggle to raise prices to maintain their profit margins.”
State of US Workers
Average hourly earnings gains have gradually eased since hitting a peak of 5.9 percent in March 2022, sliding to 4.2 percent last month. This represented the smallest year-over-year increase since June 2021.But inflation has eaten at workers’ paychecks.
Real average hourly earnings (inflation-adjusted) tumbled by 0.7 percent year-over-year in March.
The change in real average hourly earnings—combined with a drop of 0.9 percent in the average workweek—resulted in a 1.6 percent decline in real average weekly earnings.
Freelancing Options
“The economic downturn, particularly in the tech sector, and the associated wave of layoffs has initiated a talent migration,” said Micha Kaufman, CEO of Fiverr.“Skilled workers are now reconsidering their career priorities and exploring alternative work opportunities.
“As we have observed in the evolving community on Fiverr, freelancing has proven to be an appealing option for workers affected by layoffs who are interested in exercising more control over their careers.”
But now that the Federal Reserve is anticipating a recession later this year, how will this impact the job hunt and broader labor market conditions?
“A potential recession would negatively affect unemployment significantly. Losing a job is never good, but when you combine it with such high inflation it can really become disastrous,” Gonzalez said.
“Even Americans with jobs right now are struggling to afford essentials like food and gas. If those numbers would climb while more people become unemployed, we might see an economy in deep recession.”
Thirty-five percent are even working longer hours because of the current economic climate.
Still, despite increasing fears of unemployment, the quiet quitting trend—performing only the minimum requirements of your job—persists, led by Generation Z workers, according to a Morning Consult study.
Workers are being proactive by continuing to search for employment opportunities before it is too late.
“The future trajectory of the economy, including whether job losses substantially accelerate as many expect, will help dictate how many workers look for a change or will want to stay put,” said Mark Hamrick, Bankrate senior economic analyst.