- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- A Breather for the Eurozone as Inflation Hits Two-Year Low
- Germany's September CPI Report: A Clearer Picture of Inflation Trends
- US Manufacturing Demonstrates Resilience Amidst Volatility in August
- The ECB Prepares to Address Excess Liquidity Through the MRR
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Chinese CPI Trying to Buck the Deflation Trend
- Energy Prices Rise but the Core Disinflationary Trend is Maintained in September
- PPI's Quiet Rise and the Energy Elephant in the Room
- Small Businesses Grapple with Inflation and Financial Strain in September
- A Wacky September Jobs Report Shows Strong Labor Market
- A Look at the Fragile US Labor Market Ahead of the Nonfarm Payrolls Report
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
A Look at the Fragile US Labor Market Ahead of the Nonfarm Payrolls Report
October 05, 2023
The eagerly awaited nonfarm payrolls report for September is scheduled for release on Friday, October 6th, serving as an official barometer of the current state of the US labor market. This report is more than just a set of numbers; it's a critical tool that the Fed uses to gauge the health of the economy. In recent times, the Fed has been keeping a particularly close eye on labor market indicators to monitor wage inflation, which could influence their decisions on interest rates. As we prepare for the latest report, it's useful to first examine some other key labor market metrics to get a sense of what the landscape looks like. Over the past few months, these indicators have started to flash warning signs, suggesting a labor market that is increasingly fragile.
The ADP National Employment Report for September showed a significant slowdown in job growth, the slowest since January 2021. The report indicated an increase of just 89,000 jobs, a sharp decline from the 180,000 jobs added in August. Large establishments were the main culprits behind this slowdown, shedding 83,000 jobs and nullifying the gains made in the previous month. The goods sector barely moved the needle, adding a mere 8,000 jobs, while the service sector saw a modest growth of 81,000 jobs. Wage growth is also showing signs of fatigue. For those who stayed in their jobs, the year-over-year pay increase for September was 5.9%, a slight dip from 6.0% in August. This marks the 12th consecutive month of slowing wage growth. Similarly, those who changed jobs saw their pay gains shrink to 9% YoY, down from 9.7% in August.
The Challenger Job Cuts Report revealed that U.S.-based employers announced 47,457 job cuts in September, a 37% decrease from August but a 58% increase compared to the same month last year. The third quarter of this year saw 146,305 job cuts, a staggering 92% increase from the same quarter in 2022. Interestingly, the technology sector, which has led in job cut announcements this year with 151,989—a 716% increase from last year—saw only 2,537 job cuts in September, the lowest since June 2022. Another signal of the level of job cuts, initial jobless claims, was just 207,000 in the last week of September, a minor increase of 2,000 from the previous week. The monthly average for September stood at 210,400, the lowest since the start of the year and a significant drop from the 256,750 average in June.
The key takeaway is that the hiring pace is decelerating, a trend that has become more evident over the past quarter. However, it's not all doom and gloom; unemployment isn't skyrocketing either. The spike in jobless claims and job cuts, particularly in the tech sector, seems to have plateaued. As for the upcoming BLS employment report, don't hold your breath for a big jump in employment numbers. We're likely looking at a low increase, possibly in the low 100,000s or even below. However, the unemployment rate is expected to remain relatively stable, given the slight uptick reported previously.