UK Labor Market Softens Even as Wages Continue to March Higher
The UK labor market showed fresh signs of cooling in a boost for bets that interest rates are close to peaking, although accelerating wage growth remained above the Bank of England’s comfort zone.
The number of payrolled employees fell 136,000 in April, the first drop since February 2021, the Office of National Statistics said Tuesday, adding that the figure was subject to revision.
Meanwhile, worker inactivity decreased, with 156,000 people rejoining the job market.
Wage growth — the key indicator watched by the Bank of England — nonetheless continued its march higher. Average earnings excluding bonuses rose an annual 6.7% in the three months through March, up from 6.6% in the period through February.
Private-sector pay excluding bonuses is still rising by 7% year-on-year. Crucially, a key wage metric watched by the BOE — annualized private wage growth — accelerated to 5.9%, a level economists say is not consistent with bringing inflation back to the 2% target.
The jobless rate edged up to 3.9% from 3.8%. The employment rate rose 0.2 percentage points to 75.9%. There are now just 78,000 fewer people in work than before the pandemic and the number of hours worked is almost back at pre-Covid levels.
The increase in employment and unemployment was driven by another sharp fall in inactivity, those not looking for work, which was most marked among 16-64 year olds as students returned to the labor market. However, people inactive due to long-term sickness hit another record high. There are now 438,000 more long-term sick than before Covid.
In a further sign that pressures may be easing in the labor market, employers scaled back recruitment. The number of advertised vacancies fell for the tenth time in a row but still remained at 1.1 million, well higher than pre-pandemic levels. Job postings slipped in 14 of the 18 sectors tracked by the ONS as employers turn cautious amid a deteriorating economic backdrop.
The redundancy rate also dropped. Companies have said they would rather hang on to staff than let them go due to difficulties hiring.
“It’s encouraging that the unemployment rate remains historically low but difficulty in finding staff and rising prices are a worry for many families and businesses,” Chancellor the Exchequer Jeremy Hunt said.
Wages have been driven higher by acute labor shortages, which has given workers unprecedented bargaining power.
UK interest rate rises are taking the labour market off the boil
There are signs the Bank of England’s interest rate rises are making businesses think twice about hiring staff, bringing down the number of vacancies.
The effect shows up in the latest labour figures from the Office for National Statistics (ONS) as a fall of 55,000 in the number of vacancies in the three months to April and a 156,000 drop in the number of inactive workers.
Separate HMRC figures showed a 136,000 fall in PAYE employees between March and April – the first reduction since February 2021.
Put together, these figures tell us the UK’s pressure-cooker labour market – with lots of advertised jobs and too few workers to fill them – has begun to come off the boil.
When the Bank of England’s main concern relates to the tightness of the labour market, which is reflected in a high vacancy rate, then these trends will be welcomed by anyone who wants interest rates to fall and growth to pick up.
The British Chambers of Commerce head of people policy, Jane Gratton, made this issue the main focus of her comments.
“Skills shortages and unfilled job vacancies are the stark reality for many businesses across all sectors and regions,” she said.
“We still have more than a million job vacancies which are damaging the economy by preventing firms from fulfilling order books and taking on new work.”
The ONS said its surveys found that people of all ages were returning to the labour market who had previously said they were caring for relatives or retired, though the biggest number of returners were job-hunting students.
Another month of falling wages relative to inflation – the 16th consecutive fall in real pay using the ONS’s three-month average – has also forced many people already in employment to take a second or third job.
Ben Harrison, the director of the Work Foundation thinktank at Lancaster University, said the number of people opting out of work on the grounds of ill health “suggests a radically different approach is needed to boost the UK workforce”.
The TUC suggested the government’s mission to make work more insecure and promote a hire and fire culture had backfired.
Circumstances are not the same in continental Europe. The activity rate in France, Germany and even Italy is higher than it was before the pandemic. In Britain, it is lower with more than 400,000 fewer workers than in 2019.
And there is no sign of anything more than modest, incremental improvements in the months ahead, which could force the Bank of England to keep interest rates higher for longer.
Source: The Guardian
Gen Z is Choosing Stability Over Higher Pay — What Jobs Do They Want?
The sixth annual Network Trends report gathered responses from 1,853 job seekers who were recent college students and upcoming graduates in an online survey conducted from Aug. 30 to Sep. 28, 2022.
America’s youngest workers are adjusting their priorities in response to today’s uncertain economic climate. While climbing the ladder at a major company was once the goal of many entering the workforce, Gen Z workers today want more than just a big paycheck.
According to the online recruiting platform Handshake, salary and pay transparency are still important factors to consider when applying for a job, but after witnessing a heavy period of layoffs and getting besieged with warnings of an impending recession, Gen Z is prioritizing stability first and foremost.
The sixth annual Network Trends report gathered responses from 1,853 job seekers who were recent college students and upcoming graduates in an online survey conducted from Aug. 30 to Sep. 28, 2022. In a separate report issued this month, Handshake released job application trends and student sentiment data tracked from users from the senior classes of 2022 and 2023.
When asked which factors make students more likely to apply for a job, 85% chose job stability, followed by benefits at 81% and a high starting salary at 80%. Rounding out the factors were “has alumni, friend, or people, working there” (44%), “a company brand they’ve heard of” (35%) and “a fast growing company” (29%).
But money still carries weight for new job searchers. In trying to succeed during this period of increased cost of living, more Gen Z subjects said a high starting salary (defined as $82,000/year) would make them more likely to apply for a job in fall/winter 2002 (82%) than those who agreed a few months earlier, in summer 2022 (74%).
Additionally, the survey found that women expect to make an average salary of $6,200 less than men, perpetuating lower pay expectations due to the historical wage gap between women and men. The highest salary expectations were found among those in engineering-related majors, where female respondents were in the minority.
In the May report, search results showed 2023 graduates are more likely than their forerunners to be interested in jobs that require tech skills, even if they didn’t major in a tech field.
The most popular trending job and skill keywords searched were primarily in the tech sector: Cybersecurity (up 136% from 2022 to 2023), UX designer (up 133%), software developer (up 100%), product marketing (up 88%), structured query language (up 77%), data science (up 73%), product management (up 65%), Java (up 64%), machine learning (up 56%) and information security (up 54%).
Source: Yahoo! Finance
The white-collar job market is hitting a wall. What does it mean for the economy?
A lively U.S. labor market in the past two years has been a rare bright spot in a fitful economic recovery from the pandemic, with robust job growth bringing the nation’s unemployment rate close to a 50-year low. But with a possible recession looming, many companies are now slamming the brakes on hiring in the so-called knowledge sector.
Across the U.S., it’s worth noting, employers are still hiring. Payrolls rose by 230,000 in March, while the number of unemployed workers is near historic lows.
Yet there’s been a marked slowdown in hiring for many white-collar jobs as businesses gird for a possible recession.
In some ways, the situation is a reversal of the first year of the pandemic. Lower-wage service jobs, especially in leisure and hospitality, are still plentiful as Americans are going out and spending money. But hiring for professional and knowledge workers has slowed.
Several pockets of the corporate workforce are more affected by hiring slump, Bunker said. One is marketing, an area companies often trim when their business wobbles and they’re looking to cut costs. Opportunities in corporate recruitment and human resources more broadly are also drying up.
“We’re hearing from a lot of business executives that demand is much softer than it was a year ago,” said Gregory Daco, chief economist at EY. “It’s not just the tech sector — it’s broadened out into finance, professional and business services, the information sector more broadly.”
Another sign of this cooldown is that employees are putting in fewer hours. The typical workweek length, which surged during the pandemic, has fallen to pre-pandemic levels.
That’s not to say a recession is inevitable. The economy is still expanding, growing at a modest 1.1% annual rate in the first three months of the year, and none of the indicators that typically precede recessions — which include various measures of employment, spending and personal income — are flashing red, noted Apollo chief economist Torsten Slok. The construction and travel industries and higher-end consumer spending are holding up well, and there’s a “manufacturing renaissance” unfurling after Congress dedicated billions to domestic industry, analysts at Vital Knowledge said in a research note.
Source: CBS News
Northern Ireland job market starting to weaken, data suggests
The Northern Ireland jobs market may have begun to weaken in April, official data suggests.
HMRC figures show the number of people on company payrolls fell by 0.6% to just under 786,000.
The percentage of the workforce on unemployment benefits, known as the claimant count, increased to 3.9%, the highest rate since March 2022.
NI’s job market has had a sustained period of recovery since the pandemic and has largely made up lost ground.
For example the employment rate, which measures the percentage of working age adults in a job, was 72% in the first quarter of this year compared to a pre-pandemic peak of 72.4%.
Business surveys suggest that many companies have struggled to recruit sufficient staff.
Prices rise, wages fall
However, some economists are expecting the labour market to weaken during this year as continued high inflation and rising interest rates hits demand in some parts of the economy.
Meanwhile, HMRC data suggests typically monthly pay in Northern Ireland was 6.6% higher in April compared to the same period month last year.
However, with prices rising by about 10% the typical worker will still have seen the real value of their wages falling.
Since March 2020, earnings in Northern Ireland have increased by 18.3%, 2.7 percentage points lower than the average UK increase (21%) and lowest of all the UK regions.
Fewer Americans apply for jobless benefits, labor market still showing strength
Fewer Americans applied for jobless benefits last week following a previous spike that many analysts took as a sign that higher interest rates were finally cooling the labor market.
It turns out the recent jump in jobless benefit applications was largely due to fraudulent applications in Massachusetts, where claims fell this week by more than 14,000 from the previous week, analysts said.
U.S. applications for jobless claims for the week ending May 13 fell by 22,000 to 242,000, from 264,000 the week before, the Labor Department reported Thursday. The weekly claims numbers are broadly as representative of the number of U.S. layoffs.
While news of the fraudulent Massachusetts numbers made the hand-wringing over last week’s jump in claims seem overblown, economists still expect a slow uptick in layoffs in the second half of 2023.
“We expect jobless claims will resume their upward trend as the economy weakens and enters a mild recession in the second half of the year, and as layoffs become more widespread,” wrote Nancy Vanden Houten, economist at Oxford Economics.
Overall, 1.8 million people were collecting unemployment benefits the week that ended April 29, about 8,000 fewer than the previous week.
There have been an increasing number of high-profile layoffs recently, mostly in the technology sector, where companies added jobs at a furious pace during the pandemic. IBM, Microsoft, Salesforce, Twitter, Lyft, LinkedIn and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November.
But it’s not just the tech sector that’s trimming staff. McDonald’s, Morgan Stanley and 3M also announced layoffs recently.
Source: ABC News
College seniors are graduating into a job market in flux, but a handful of industries are still eager to hire
Jobs growth last month beat analysts’ expectations in numbers released on Friday. Nonfarm payrolls increased 253,000 for April, more than the estimated growth of 180,000, according to the Bureau of Labor Statistics. The low unemployment rate edged even lower, from 3.6% to 3.4%.
But the report was the latest in a host of mixed signals about the health of the job market awaiting new graduates. Earlier this week, the latest Job Openings and Labor Turnover Survey for March showed new positions in the U.S. falling for the third consecutive month.
Openings were down 384,000, the lowest level since April 2021.
In an April survey by the National Association of Colleges and Employers, an industry group for recruiters and higher ed professionals, businesses said they expected to hire 4% more graduates from the class of 2023 than they did from the class of 2022. But that was a drastic decline from the group’s December projection of about 15%.
Then, the ADP payroll report said private businesses added 296,000 jobs in April, more than double that of the previous month.
Experts said a combination of factors got us here. Some industries, like the tech sector, have felt the brunt of the 10 interest rate hikes the Federal Reserve has implemented since March last year. In other areas, while the economy has generally recovered from the pandemic disruption, employers can’t find enough workers.
“There still are sectors and enterprises that are having trouble getting the workers they need, and all one needs to do is travel in the United States to experience that,” said Mark Hamrick, senior economic analyst for Bankrate.
Those sectors include health care and leisure and hospitality, which posted gains in Friday’s job report by about 40,000 and 31,000 openings, respectively.
A report released Tuesday by the recruiting software company iCIMS found that the class of 2023 expected an average salary of about $66,500, more than $8,000 higher than what employers expected to pay entry-level employees but lower than the previous year’s expected pay of $70,000.
A recent state-commissioned study showed that Oregon, like much of the country, is contending with a shortage of registered nurses. It would need to fill at least 13,500 positions to meet the need, the report said.
Soure: NBC News
Understanding America’s Labor Shortage
We hear every day from our member companies—of every size and industry, across nearly every state—they’re facing unprecedented challenges trying to find enough workers to fill open jobs. Right now, the latest data shows that we have 9.9 million job openings in the U.S., but only 5.8 million unemployed workers.
We have a lot of jobs, but not enough workers to fill them. If every unemployed person in the country found a job, we would still have 4.2 million open jobs.
Understanding the Gap
Right now, the labor force participation rate is 62.6%, down from 63.4% in February 2020. It’s clear that able workers are being overlooked or sitting on the sidelines. But there’s not just one reason that workers are sitting out, but several factors have come together to cause the ongoing shortage.
The U.S. Chamber surveyed unemployed workers who lost their jobs during the pandemic on what is keeping them from returning to work. Twenty-seven percent indicated that the need to be home and care for children or other family members has made the return to work difficult or impossible. More than a quarter (28%) indicated that they have been ill and their health has taken priority over looking for work.
The Great Reshuffle
Meanwhile, there has been a “Great Reshuffle” among workers. ‘The Great Resignation’ worked its way into our vocabulary as the shift of our labor force started to become apparent—and the hashtag #quittok even went viral as social media users posted about quitting their jobs in search for more free time or better opportunities.
A full 4.2 million people quit their jobs in November 2022, but hiring has outpaced quits since November 2020 (hovering around 4%).
Understanding why workers are missing from unfilled jobs is only half of the equation. The next step in addressing the labor shortage is to implement solutions to attract and retain new workers is underway.
Source: U.S. Chamber of Commerce
Global economic growth estimated at 2.6% amid strong US job market, China’s reopening: KIEP
Korea’s state-run economic think tank said Tuesday it has raised the global economic growth outlook to 2.6 percent for 2023, on the back of the strong U.S. job market and China’s reopening.
The outlook marks a 0.2 percentage-point increase from a 2.4 percent expansion projected in November, according to the Korea Institute for International Economic Policy (KIEP).
The 2023 growth estimate comes in line with the estimate by the Organization for Economic Cooperation and Development but is lower than the 2.8 percent suggested by the International Monetary Fund.
The revision came as the KIEP expects the U.S. economy to grow 1.2 percent this year, up 0.6 percentage point from the previous report, on its strong job market along with hopes that its inflation has reached the peak.
The Chinese economy is also anticipated to expand 5.5 percent on-year in 2023, up from the previous outlook of 4.8 percent, amid Beijing’s efforts to revitalize domestic consumption.
In the second half of 2023, the institute said the global economy will “go through a narrow path heading toward a slow recovery.”
“It is like sitting in a saddle,” KIEP President Kim Heung-chong told reporters. “We are going through a very narrow path, and if something goes wrong, we can also fall.”
Concerning other regions, the KIEP said the eurozone economy is set to move up 0.8 percent on-year in 2023, marking a sharp rise from zero growth estimated in November. The researcher said the revision came on the back of stronger private consumptions and trade.
Source: The Korea Times