What to expect from a job report


The latest monthly jobs report due at 8:30 am is expected to show the US economy added 200,000 jobs in December and the unemployment rate held steady at 3.7% for the third straight month.

The Labor Department’s latest monthly employment chart for 2022 likely brings some familiar storylines.

— Job growth is expected to remain strong, albeit at a slower than historically high rate of job gains in the early stages of the economic recovery from the pandemic.

— Workers are still not returning to heavy sectors such as leisure and hospitality, community service and childcare.

— A strong labor market, while keeping the economy buoyant, is a little too resilient for the Federal Reserve’s needs to reduce inflation by easing demand.

— A tight labor market needs more workers and wage growth has yet to return to pre-pandemic levels, which should help quell fears of a wage-price spiral, when higher wages lead to price inflation, which in turn leads to higher wages.

Lather, rinse and repeat.

“The preponderance of evidence suggests that the labor market is still not back to normal,” said Julia Pollak, chief economist at online employment marketplace ZipRecruiter.

The U.S. labor market remains unusually tight — something reinforced Wednesday when the Bureau of Labor Statistics released its Job Openings and Labor Turnover Survey (JOLTS) for November. That still showed north of 10.5 million jobs, or about 1.7 available positions for every job seeker.

The survey also showed that what was considered the “Great Resignation” is still ongoing, Pollack said. During the Covid-19 pandemic, record numbers of workers have voluntarily left their jobs in search of greener pastures, whether it be better working conditions, higher pay or increased flexibility.

For 18 months now, the number of people leaving their jobs every month has exceeded 4 million. In the two decades before the pandemic, the monthly average was 2.6 million.

“Companies are still grappling with huge retention challenges,” Pollack said.

The latest JOLTS did not show the market weakening as some had hoped or expected. But it provided a window into some of the rifts taking place at a time when some businesses are hiring more to meet consumer demand, while others are scaling back operations due to inflation, the ripple effect of high interest rates or to prepare for less efficient economic times. ahead.

Industries such as lodging and food services reported about 50% fewer layoffs in November than averaged between 2000 and February 2020, Pollack said.

“I think it’s mostly a pre-pandemic recovery,” he said. “Leisure and hospitality are still short for hundreds of thousands of workers and are still expanding as costs recover faster than staffing.”

As of October 2022, the leisure and hospitality sector was still more than 1 million jobs, or 6.3%, below pre-pandemic employment levels, according to a CNN Business analysis of BLS employment data.

Technology companies make up the majority of job cuts announced in recent months. As people are forced to work and spend from home during the pandemic, tech and e-commerce firms have rallied to meet the demand.

Technology was the leading industry for job cuts in 2022, with 97,171 job cuts announced, according to Challenger, Gray & Christmas’s latest job announcement report released Thursday.

In total, job cuts in 2022 amounted to 321,970 people, an increase of 363,824 people compared to the previous year. According to the report, 43,651 job cuts were announced in December, a 129% increase from December 2021.

But the job cuts announced in 2022 were the second lowest since 1993, data from Challenger, Gray & Christmas showed. In 2019, 592,556 layoffs were announced.

“While employers are actively planning for the recession, the overall economy is still creating jobs,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas, said in the report.

If the monthly jobs report comes in as expected on Friday, it means the economy will add more than 4.5 million jobs in 2022.

That would be the second-highest annual total on record after a record gain of 6.7 million in 2021, a pendulum swing from a record 9.2 million job losses in 2020, BLS data show.

“The Federal Reserve wants to see [monthly job growth] the number is close to or below 100,000,” said Nick Bunker, director of economic research for North America at Indeed Hiring Lab. “It’s more in line with a clearly cooling labor market.”

Drivers wait in traffic during morning rush hour on February 23, 2022 in Los Angeles, California.

Economists also expect average hourly earnings growth to slow monthly and year-over-year, to 0.4% and 5%, respectively, according to Refinitiv.

Wage increases, while outpacing inflation, remain well above pre-pandemic averages and higher than the Fed would like to see in its rate hike campaign. Chairman Jerome Powell, while admitting that wage increases have not driven inflation to its highest level in 40 years, has repeatedly noted that continued wage growth in such a tight labor market can keep inflation high.

“This is a collection of labor market data for workers and job seekers. [continued, strong nominal wage growth] this is very positive news,” said Bunker. “But for central bankers, they see it as a problem.”

Inflation has started to decrease in recent months, the main indicators show a decrease. But for the Fed to meet its desired 2% inflation target, the central bank forecast in December that the labor market would have to take a hit, with unemployment expected to rise to around 4.6% this year.

“The fact that inflation has cooled without seriously affecting the labor market is a sign that much of this very high inflation is not being driven by the labor market and that it is possible for inflation to fall below these levels. without the labor market taking a hit,” Bunker said.

“But it’s not clear how far inflation can go before the labor market gets worse, or rather, it’s not clear what the underlying pace of inflation is with the labor market so tight.”

—CNN’s Matt Egan contributed to this report.

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