- Here’s what the US labour market looks like right now
Unemployment fell to 3.3%, incomes were soaring to historic levels, and inflation was rising at a fast clip. The above graphic looks at the industries driving today’s robust job market using data from the Bureau of Labor Statistics.
Still, as the table below shows, a key part of the services sector—leisure and hospitality employment—remains under pre-pandemic levels.
We are also seeing strong gains in transportation and warehousing. Last year, the sector added an average of 23,000 jobs, totaling almost 955,000 over the course of the pandemic.
Today, trucking jobs exceed 2019 levels and warehouse employment is roughly 50% higher.
Although manufacturing hasn’t seen the highest gains, the sector has one of the lowest unemployment rates across job sectors, at 2.4%. Yet the industry faces an acute labor shortage—if every skilled unemployed worker were to fill open job vacancies, a third of jobs in durable manufacturing would remain open.
Despite rock-bottom unemployment numbers, wage growth is slowing. In January, it fell to 4.4% annually, down from a multi-decade high of 5.9% in March last year.
At the same time, wage growth falls below inflation by about 1%.
Wage growth is carefully watched by the Federal Reserve. Typically, their annual wage growth target is 3.5% to be compatible with 2% inflation.
In the current environment, this wage growth trend serves as a double-edged sword. As wage growth slows, workers are less likely to see wages keep up with inflation. On the other hand, slower wage growth could help prevent inflation from rising in the first place—and interest rates from climbing higher.
Eventually, both higher borrowing costs and elevated compensation costs could weigh on corporate profits. On the other hand, the pandemic has changed the labour market. Relief legislation may continue to buoy the job market and workers may also remain scarce as people retire or leave for other reasons.
Source: World Economic Forum
2. Canada’s Labour Market Continues to Roll
The Canadian labour market added 22k positions in February, with full-time employment up 31.1k and part-time employment down 9.3k.
The unemployment rate held steady at 5.0%. The participation rate also held at 65.7%.
By industry, employment was up in health care (+15k), public administration (+10k), and utilities (+7.5k). Losses were seen in business, building and other support services (-11k).
Lastly, total hours worked were up 0.6% month-on-month and wage growth accelerated, up 5.4% year-on-year (vs 4.5% in January).
The employment gain alongside higher wages and people working more hours points to a labour market that refuses to cool. Not to mention, all the job gains were in the private sector where cyclical strength is most apparent. All this means that Canadian incomes are seeing a boost, which will drive more consumer spending, presenting further upside to GDP growth for the first quarter.
For the Bank of Canada, the headline print might be more ‘normal’ compared to prior months, but it is still too high. Although the BoC has been effective at slowing the parts of the economy most sensitive to interest rates, and it has seen inflation decelerate confidently, a more decisive turn is needed. Given that the BoC is in wait-and-see mode with its conditional pause, it believes that it is only a matter of time before a slowdown shows up in the broader economy. But with today’s labour market report, it will have to wait a little while longer.
Source: Action Forex
3. Layoffs revised up in January but US labour market still strong
US job openings fell less than expected in January and data for the prior month was revised higher, pointing to persistently tight labour market conditions that likely will keep the Federal Reserve on track to raise interest rates for longer.
But the United States Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday also hinted at some cracks forming in the labour market. Layoffs rose in January and job cuts were higher than initially thought in 2022. Fewer people voluntarily quit their jobs.
Nevertheless, the labour market has remained strong, with 1.9 job openings per every unemployed worker in January. Fed Chair Jerome Powell told lawmakers on Tuesday that the US central bank would likely need to raise rates more than expected and he opened the door to a half-percentage-point increase this month to combat inflation after a recent series of strong economic data.
“The decline in job openings does not indicate any meaningful improvement in the balance between labour demand and labour supply from the perspective of the Fed,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York.
Job openings, a measure of labour demand, decreased by 410,000 to 10.8 million on the last day of January. Data for December was revised higher to show 11.2 million job openings instead of the previously reported 11 million. Economists polled by Reuters had forecast 10.5 million job openings.
The report also showed job openings were mostly higher than initially estimated in 2022, averaging 11.2 million, an increase of 1.2 million from 2021.
Job openings increased in transportation, warehousing and utilities as well as nondurable goods manufacturing.
The job openings rate fell to a still-high 6.5 percent from 6.8 percent in December. It averaged 6.8 percent in 2022, up from 6.4 percent in 2021.
Hiring rose to 6.4 million from 6.3 million in December. The hires rate increased to 4.1 percent from December’s 4 percent. There were 77.2 million hires in 2022, a gain of 1.2 million from 2021. The hires rate averaged 4.2 percent in December, down from 4.3 percent in 2021.
Layoffs jumped 241,000 to 1.7 million, concentrated in the professional and business services industries. Layoffs, however, decreased in federal government. They increased 461,000 in 2022 to 17.6 million. Still, they remain low by historical standards.
About 3.9 million people quit their jobs, down 207,000 from December. The decline was mostly in professional and business services, educational services and the federal government. A record 50.6 million people quit in 2022.
Source: Al Jazeera
4. What is driving current labour market shortages and how older workers could help
Many countries are struggling with worker shortages right now as companies in the US, UK and the EU all struggle to fill job vacancies.
This is often attributed to pandemic-related phenomena such as the “great resignation” or “great reshuffle”, when many people left or changed jobs to improve their work-life balance. Long-term sickness also plays a role in countries like the UK.
But the underlying reason for these mounting shortages is the combination of a decline in workers aged 35 years and under and an ageing workforce. This may sound like the same thing, but it isn’t.
It also carries the risk that (parts of) society will grind to a halt due to a lack of staff, for example, in healthcare, childcare, public transport, the police and many other sectors that are essential for the proper functioning of a country.
Technology (artificial intelligence or robots) will probably relieve this pressure over the long term. But an obvious short-term solution is the better deployment of older employees.
So why is it so difficult for older people to find a place in a labour market that is calling out for more workers? The explanation is twofold.
In the first place, many directors, HR managers and department heads grew up – like much of the world – in a society in which old was largely synonymous with “worn out”. This kind of ageism applies not only to companies, but also to the television and movie industry, politics and sport, among other areas.
The idea that an older person should be replaced with someone younger can even be the case in countries where as much as a quarter of the population is over 65 years old. Such a deeply ingrained and widespread habit does not simply disappear and is also difficult to prohibit by law.
A second, perhaps more concrete reason, is that employers – sometimes quite rightly – believe that older workers tend to have outdated knowledge and skills. If someone has done the same work for years, they could be very good in a particular niche.
But if that niche is a specific machine that hasn’t been updated in decades, for example, when it breaks down, they may quickly find themselves sidelined because they have not learned how the 2022 equivalent works.
And while many older people want to build the necessary knowledge and skills to work this new machine, others may be less enthusiastic. Even then, research shows that employers can be reluctant to invest in new knowledge and skills for older employees. They might wonder how long the organization will benefit from these investments.
Even with a large-scale training offensive for older workers, it will not be easy to break the tradition that employers prefer younger workers. Establishing some good examples now could help to accelerate this process, providing older employees with a new lease of life in their careers and helping to ease the labour shortage in countries around the world.
Source: The Conversation
5. UK labour market can’t hold out much longer against impact of stagflation
The number of people looking for work rose while the number of job vacancies fell. Hours worked in the economy were down while days lost through strikes in 2022 were the highest annually since 1989.
There are a few complications, as shown by the latest figures from the Office for National Statistics. The legacy of the pandemic has affected the supply of labour, largely because workers in the older age groups have given up work, either through choice or due to long-term sickness. Although the number of vacancies has fallen since last summer, it is still well above pre-pandemic levels.
Businesses and employees are responding to these trends in predictable ways. Firms are looking past the current economic slowdown and wondering whether they will be able to replace workers in the future if they make them redundant now. Mostly, they are hoarding staff, taking on part-time rather than full-time employees, and paying their workers more.
Annual growth in regular pay – excluding bonuses – stood at 6.7% in the three months to December. In the private sector, earnings growth was 7.3%.
There are, though, signs that people who were formerly inactive – neither working nor actively looking for a job – are starting to return to the jobs market. Again, this is only what might be expected in light of the problems many people are having to make ends meet. Inactivity fell by 113,000 towards the end of last year as long-term sickness dropped and early retirees made themselves available for work.
So far, the labour market has proved to be remarkably resilient but that won’t last.
There are already signs from the latest data for inactivity and pay that the labour market is on the turn. The fact that unemployment has started to rise suggests one thing: this is going to hurt.
Source: The Guardian
6. FirstFT: US labour market tensions ease
Major US employers from fast-food chains to arms manufacturers are reporting a dramatic improvement in hiring conditions despite official data showing unemployment at its lowest level for decades.
Senior executives across a host of S&P 500 companies gave optimistic updates on the labour market in recent quarterly earnings reports. “Corporate commentary has been very notably different from previous quarters,” said Binky Chadha, chief global strategist at Deutsche Bank.
The improvement has not been limited to lower-paying industries such as restaurants and hotels. Boeing chief executive David Calhoun, for example, told analysts that “we’ve had no trouble hiring people”, and said pressures through its supply chain had “really ease[d] up”.
In an encouraging sign for the tech industry, which has seen tens of thousands of jobs cut in past year, the chief executive of Hitachi said the US was a key hiring ground for the Japanese company.
Chief executive Keiji Kojima told the Financial Times that cost-cutting campaigns at Amazon, Meta, Alphabet, Microsoft and other US tech groups would help the industrial conglomerate as it goes on a multibillion-dollar recruitment spree to expand its digital services.
Source: Financial Times
7. Assessing the current state of the global labour market: Implications for achieving the Global Goals
The global unemployment rate declined significantly in 2022, falling to 5.8 per cent from a peak of 6.9 per cent in 2020 as economies began recovering from the shock of the COVID-19 pandemic. Despite an uncertain global economic outlook, unemployment is projected to increase only moderately in 2023, as a large part of the shock is being absorbed by falling real wages in an environment of accelerating inflation. Global unemployment is projected to edge up slightly in both 2023 and 2024, reaching 211 million, although the rate will remain at 5.8 per cent.
Before the onset of the pandemic, the incidence of informal employment had been slowly declining and stood at 57.8 per cent in 2019. The initial waves of the pandemic resulted in disproportionate job losses for informal workers, particularly for women, during 2020. The subsequent recovery has been driven by informal employment, which has caused a slight increase in the incidence of informality worldwide.
For decades, women have been facing persistent barriers to accessing decision-making positions such as legislators, senior officials, CEOs, and other managerial occupations. Globally, they held only 28.2 per cent of management positions in 2021, although they accounted for almost 40 per cent of total employment. While the share of women in management has been on the rise worldwide and is slightly higher than in pre-pandemic times, progress has been slow, with an increase of only 0.9 percentage points since 2015. At the current rate of progress, more than 140 years would pass before gender parity in managerial positions would be achieved.
While hourly earnings (and the derived gender pay gap) is the official SDG indicator, a new ILOSTAT indicator on gender labour income gaps points to much wider imbalances between women and men. Since almost half of the world’s workers are self-employed, labour income – encompassing earnings of all workers, not just employees – provides a more comprehensive picture of pay gaps. In 2020, for each dollar men earned in labour income, women earned only 52 cents.
8. British labour market, and pay growth, slow in February – REC
Britain’s labour market showed further signs of cooling as permanent job placements fell for the fifth month in a row in February and pay growth slowed, reflecting employers’ concerns about the economy, a survey published on Wednesday showed.
The Recruitment and Employment Confederation/KPMG monthly permanent placements index fell to 46.3 last month, down from 46.8 in January with employers more likely to use temporary workers to fill roles.
Clare Warnes, partner for skills and productivity at KPMG UK, said the economic outlook was impacting hiring activity.
“Employers keep playing the short game by focusing on temporary hires,” Warnes said.
Wednesday’s survey echoed other signs of a slowdown in the labour market although some measures of the broader economy, including business surveys and data on consumer confidence and public finances, have shown improvement, easing worries about a long recession.
REC said increases in starting salaries for permanent and temporary workers were the second-weakest in nearly two years.
REC said vacancies grew in February at the fastest pace in four months with the healthcare industry showing the highest demand for workers.
The availability of workers to fill jobs fell at its slowest pace since March 2021 with some recruiters saying recent redundancies had increased the supply of workers.
Source: Reuters
