A worker restocks shelves at a CVS Pharmacy on February 7, 2024 in Miami, Florida.
Joe Raedle | Getty Images
U.S. job growth likely slowed in February but is far from stalling as business demand for workers continues.
When the Labor Department releases its nonfarm payrolls report at 8:30 a.m. ET on Friday, Dow Jones consensus estimates expect the unemployment rate to reach 198,000 and remain steady at 3.7%.
If the forecast is anywhere near accurate, that would mark a significant decline from January’s explosive growth of 353,000, but would still be representative of a fairly dynamic labor market.
“This is kind of a cautious labor market. Employers are hiring to keep up with business activity, said Julia Pollak, chief economist at ZipRecruiter. “Many companies are still reporting higher sales than expected. But they are not aggressively hiring new employees to grow and expand. Many people are still waiting.”
The increase in January followed a strong gain of 333,000 in December and appeared to counteract the picture of a worrying hiring climate.
However, Pollak noted that both figures were inflated due to seasonal bias, with retailers in particular cutting fewer holiday jobs than expected. However, February could see growth of up to 240,000 as companies look to fill increased levels of job vacancies, Pollak said.
Too much growth?
ZipRecruiter’s Quarterly Job Seeker Survey found that expectations about medium-term prospects reached a record high, while candidates also reported greater confidence in their financial well-being and the current state of the job market.
Under normal conditions these would all be positive qualities. But there are other concerns now.
A still-red-hot job market could, as expected, keep the Federal Reserve from cutting interest rates this year. Earlier this week, Atlanta Fed President Raphael Bostic expressed concern about possible “pent-up exuberance” that could be released in the business community after the central bank begins easing.
“Once the rate cuts begin, that will give certain industries a boost that they’ve been waiting for, especially when it comes to capital investment,” Pollak said. “Many companies are still holding back and waiting. The manufacturing sector will be very interesting to watch. Recently, the number of job vacancies in durable goods production has improved somewhat. The checks are in the mail.”
Markets expect the Fed to begin cutting interest rates in June, although the outlook has become more uncertain in recent weeks as policymakers weigh the direction of inflation.
Despite uncertainty over monetary policy, companies have pressed ahead with hiring.
There were mixed signs regarding layoffs. According to Challenger, Gray & Christmas, this was the February with the most announced layoffs since 2009, but workers appear to be able to quickly find other jobs, as evidenced by small changes in weekly unemployment claims with the Labor Department.
The department’s job vacancies and labor turnover survey for January, released earlier this week, found that layoffs actually declined over the month, falling nearly 16% compared to a year ago. The number of job vacancies was little changed compared to the previous month, but fell by 15% compared to the same period in 2023. The number of job vacancies exceeded the number of available workers by 1.4 to 1, compared to 1.8 to 1 in the previous year.
“I haven’t seen any layoffs,” said Tom Gimbel, founder and CEO of LaSalle Network, a staffing and staffing company. “What I see again and again is that small and medium-sized businesses are chasing market share, and the hiring seems to be in that range. They hire the people that the larger companies, especially Big Tech, fire.”
Demand remains strong
In fact, a steady series of layoffs at tech giants has been making headlines lately. The trend continued into February, when job posting site Indeed reported a 28% decline in job postings for software development and a 26% decline in information design and documentation.
But other sectors also continue to show demand. Job postings increased by 102% for doctors and surgeons, 83% for therapists and 82% for civil engineering.
In its latest economic survey, the Fed found that the extremely tight labor market has eased somewhat, but there are still pockets of activity.
“Companies generally found it easier to fill job vacancies and find qualified applicants, although difficulties continued to attract workers for highly skilled positions, including health care professionals, engineers, and skilled trades workers such as welders and mechanics,” the Fed said in their report “Beige Book” report was released on Wednesday.
The report precedes each Fed meeting by two weeks and helps inform policymakers about trends across the economy. Company contacts noted that wages continue to rise, albeit more slowly. Wage increases are an important piece of the inflation puzzle.
Friday’s report is expected to show average hourly wages rose just 0.2% from the previous month, compared with a 0.6% increase in January, although it is still up 4.4%. The big monthly increase in January was largely due to a decline in average weekly working hours, which increases the appearance of average hourly wages.
Despite the higher-than-expected inflation numbers, Fed Chairman Jerome Powell said Thursday that the central bank is “not far” from gaining enough confidence in inflation trends to begin cutting interest rates.
“Many of the hourly wage increases were primarily due to two things: more liberal municipalities and a labor shortage due to Covid,” Gimbel said. “I don’t see much wage growth this year.”
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2024-03-07 21:27:14
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