Labor Market Cooled Some, September Jobs Report Shows Payrolls Grew by 263,000

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As high inflation and increasing interest rates weighed on the economy, the unemployment rate decreased to 3.5%, marking a half-century low. U.S. companies added 263,000 jobs in September, continuing a steady cooling pattern in the labor market.

As a result of people exiting the labor market, the unemployment rate decreased from 3.7% in August to 3.5% on Friday, matching a half-century low previously attained in July. Compared to the same month a year prior, wages increased 5.0% in September, a slower rate than August’s 5.2% annual rate.
After the data, stocks opened lower, and Treasury rates increased.

Sarah House, the senior economist at Wells Fargo, said, “we are seeing labor demand cool.” However, there is still a long way to go until the supply and demand of labor are balanced again.

The leisure and hospitality sector created the most employment (83,000), leading to job growth. Sixty thousand more people now work in healthcare.

According to the Labor Department’s Tuesday report, job opportunities decreased by 10% in August from 11.2 million in July to 10.1 million when seasonally adjusted. The fall in openings of 1.1 million is the most since the early stages of the Covid-19 epidemic in 2020. As a result, there were fewer job postings than in the previous year, although they were still higher than in 2019 when they averaged 7.2 million each month.

Even if the payroll rise is still substantial, it shows a further slowdown in hiring from the monthly average of over 440,000 during the first half of 2022.

The percentage of individuals working or seeking employment or the labor force participation rate decreased in September. Since the labor market requires more employees to compete for employment to help temper wage rise and increase overall productivity, this might make the Federal Reserve’s fight against inflation more difficult. The participation rate decreased from 62.4% in August to 62.3% in September.

According to Traci Fiatte, who oversees professional and commercial staffing for Randstad USA, “even in blue-collar industries, like manufacturing and logistics, we’re still seeing significant demand and substantially greater volumes of applications to those roles.” That indicates that people in manufacturing and logistics are interested in returning to labor and that pay inflation is decreasing.

Even if they have increased marginally recently, layoffs are still at historically low levels. Weekly unemployment claims, a proxy for layoffs, have been very close to their pre-epidemic 2019 average of 218,000 this year.

In sectors like technology and real estate, particularly vulnerable to interest rate rises, many businesses are halting recruiting or terminating employees. As consumer tastes switched from commodities to services, several businesses that earlier in the epidemic experienced an increase in demand are also making reductions.

In its fourth round of job cuts this year, workout equipment manufacturer Peloton Interactive Inc. announced Thursday that it would eliminate nearly 500 positions or about 12% of its remaining employees. Other businesses, including those that own Facebook, like Meta Platforms Inc., Snap Inc., and Stanley Black & Decker Inc., are eliminating staff. In contrast, others, including Amazon.com Inc. and Google, have announced they would halt or curtail recruiting.

The need for personnel hasn’t decreased in other companies. Filling roles is one of the top concerns among the 20,000 owners in the association, according to Laura Lee Blake, president, and CEO of the Asian American Hotel Owners Association. Other hotel owners have installed self-check-in kiosks as a result of employment difficulties. However, some jobs, like cleaning rooms, cannot be automated.

Because they lacked sufficient employees, “one member had their parents come out of retirement to assist cover some of the shifts,” Ms. Blake said. “I haven’t overheard any conversations regarding layoffs. The main issue is how eager they are to meet new people.
Despite the tight labor market, some employees continue to exert pressure for pay raises or improved benefits in anticipation of a potential slowdown in employment growth.

A marketing specialist in Chicago named Cassandra Wilander said she moved companies twice this year and saw a change in how recruiting managers conducted the process.

She was able to rapidly locate employment for the first time in January and request a big wage raise. The procedure took longer the second time this summer, and she had to haggle harder for her pay after the initial offer was less than she had planned.

Ms. Wilander, 36, left her previous work in January after becoming dissatisfied with the company’s stringent pandemic measures. A rise in compensation of $25,000 followed the change. However, when that company lost access to downtown office space, Ms. Wilander decided to try job-hopping once more and quit her position during the summer to hunt for alternative employment.

After the first considerable period of unemployment in her career, she accepted a position as a communications expert at a commercial real estate firm in September. She claimed that compared to her prior search, employers were much slower to respond to her. Nevertheless, her search was successful, and she accepted a position.

Ms. Wilander stated, “I know my worth and the value I contribute. I don’t know if other people would be willing to hop in that manner, so I guess I’m a little special.

https://www.bls.gov/news.release/pdf/empsit.pdf

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