- Overall, the US labor market is starting to show signs of cooling off as layoffs/discharges have increased by 3.1% while quits have decreased by 2.7% over the last three months.
- Other macroeconomic indicators point to high levels of inflation and expected future interest rates hikes by the Federal Reserve to lower Inflation.
- Job openings were up in construction (+54K), wholesale trade (+47K), and real estate and rental and leasing (+10K), while the largest decreases were in healthcare and social assistance (-236K), other services (-183K), and retail trade (-143K).
- There were 4.0 million more job openings than workers available, a decrease from the previous month of 5.2 million.
- Total nonfarm payroll increased by 263,000 over August to September, reaching 153 million, resulting in an increase of 0.2% MoM and 3.9% YoY.
- The headline unemployment rate (U-3) decreased from 3.7% to 3.5% over August to September.
- The labor force participation rate decreased slightly from 62.4% to 62.3% over the same period, remaining 1.1 percentage point below pre-pandemic levels.
- Wages remain below inflation as annual wage growth is 5.0% compared to annual inflation which is at 8.2%.
Job market showing signs of cooling
Job openings decreased from 11.1 to 10 million from July to August, a decrease of 10.0% MoM and 5.4% YoY. There were 4.0 million more job openings than workers available, a slight decrease from the previous month of 5.2 million. Job openings were up in construction (+54K), wholesale trade (+47K), and real estate and rental and leasing (+10K), while the largest decreases were in healthcare and social assistance (-236K), other services (-183K), and retail trade (-143K).
The ratio of job openings to job seekers decreased by 21.0% MoM; however, it increased by 33.1% YoY. The ratio remains at an elevated level implying that it is still a job seekers market.
Total nonfarm payroll increased by 263,000 over August to September, reaching 153 million, resulting in an increase of 0.2% MoM and 3.9% YoY; however, other macroeconomic indicators such as high inflation and high interest rates are also contributing to a gradual cooling of the US labor market.
Unemployment & Labor Force
The headline unemployment rate (U-3) decreased from 3.7% to 3.5% over August to September, while the labor force participation rate slightly decreased from 62.4% to 62.3% over the same period, remaining 1.1 percentage point below pre-pandemic levels. Alternative measures of labor utilization such as the (U-6) unemployment rate, which captures the marginally attached (discouraged workers) and those that work part time for economic reasons, decreased from August to September from 7.0% to 6.7%. The employment to population ratio, which is the proportion of the country’s working-age population that is employed remained unchanged at 60.1 from August to September and remains 1.1 percentage points below pre-pandemic levels.
US labor markets continue to experience slack or inefficiencies in the economy; however, there are now 106,000 more civilians in the labor force, and the labor force participation rate is 1.1% below pre-pandemic levels.
Although the labor force participation has increased by 1.1% YoY, Radancy’s cost per application has increased by 39.9% YoY. It continues to be more expensive to recruit talent as the labor force participation rate is still below pre-pandemic levels with 5.8 million Americans missing from the labor force as of October 7, 2022.
The US Census Bureau’s most recent release of the Household Pulse Survey Data covering the time from September 14 to September 26, surveyed Americans on several issues, including employment and reasons why they were not working. Of the almost 100 million Americans surveyed, the top three reasons for not working outside of retirement (44 million), other reasons (16.4 million), and did not report a reason (6.5 million) include being sick or disabled (10.6 million), individuals not wanting to be employed at the time of the survey (6.3 million), and caregiving for children not in school or daycare (4.8 million). There was a 30.3% increase in individuals not wanting to be employed between Household Pulse Survey Week 48 (Aug 7–Sep 8) and Week 49 (Sep 14–Sep 26), followed by a 24.6 percent increase in being sick or disabled. The reason of caring for self or someone with coronavirus symptoms experienced the largest decrease of 21.6% between both surveys.
Separations increase, including quits and layoffs
Total separations – the summation of quits, layoffs/discharges and other separations increased by 3.1% from July to August; however, these decreased by 0.7% over the last three months. Quits increased by 2.5% MoM, and increased by 0.8% YoY. Quits were up in accommodation and food services (+119K) and down in professional and business services (-94K). Signs of a cooling labor market are evident as layoffs/discharges increased MoM and YoY by 5.0% and 4.0% respectively. The last three months show that layoffs/discharges have increased by 3.1% while quits have decreased by 2.7%.
Quit rates by industry have experienced the largest increase in financial activities by 21.4% YoY, with the largest decrease in retail trade of 18.2% YoY. Education and health services experienced the largest increase in the layoffs/discharges rate of 20.0% YoY, while arts, entertainment, and recreation experienced the largest decrease of 35.7%.
Labor Flows
According to the SF Fed Data Explorer’s most recent data, those with a bachelor’s degree and 55 years old experienced the highest percent change YoY of 28% from transitioning their employment status from employed to nonparticipation or leaving the labor force, while those with some college education and who were 16 to 24 years old experienced the largest decrease YoY of 37.2%.
In terms of gender and education, prime age working females with some college education experienced the largest percent change of 6.6% in terms of being included in the labor force today compared to pre-pandemic levels. The trend is reversed when comparing prime age working females with a bachelor’s degree or higher to prime age working males with a bachelor’s degree, as females experienced a 6.3% decline, while males experienced a 4.6% decline. A recent Strada Education Network report found that among female respondents who are not returning to work, 91% cited personal reasons such as caregiving, and illness or disability compared to 58% of males whom cited the same reason.
Radancy collects data on candidate experience from survey data that comes from over 1M candidate experience surveys completed across our network of enterprise career sites. Recent data indicates that work with a greater purpose and interesting and challenging work have increased YoY for both males and females. Compensation & benefits and convenience have declined for both genders YoY; however, in the last three months, males experienced an 8.9% increase in prioritizing convenience while females experienced a 4.0% increase.
Given the ongoing inflation situation in the US, compensation and benefits declined by 4.8% in the last three months for females; however, it increased for males by 4.0%. The percent change in the median wage growth for males has increased faster than females across all time categories including MoM, YoY, and 3-months according to the most recent data in the Atlanta Fed Wage Growth Tracker. In terms of labor force participation rates, females have experienced larger percentage gains MoM and YoY; however, males have outpaced females in terms of the most-recent three months with respect to labor force participation rates.
Gains in Employment and Average Hourly Earnings
Leisure & hospitality and information experienced the largest gains in employment YoY of 8.6% and 5.9% respectively, while utilities experienced the smallest growth of 0.4%. In terms of wage growth, leisure & hospitality and information experienced a 7.9% and 7.2% increase respectively, while other services experienced the smallest gain of 2.7% YoY. Wages remain below inflation as annual wage growth is 5.0% compared to annual inflation, which is at 8.2%.
Remote Work & Housing Prices
New research from the San Francisco Federal Reserve Bank shows that there is a direct relationship between the impact of remote work on housing prices, essentially a one percentage point increase in remote work results in a 0.9 percentage point increase in housing prices. Although Americans have experienced a high interest in remote work according to the Survey of Working Arrangements and Attitudes conducted by Bloom et al. at Stanford University, the average rent is higher in metros where remote work is also higher. People cite saving time on their commute as one of the many benefits of remote work according to the WFH research. Given rising gas prices, there is an inverse relationship between gas prices and average office occupancy rates. Recent Kastle data shows that for the month of September, the office occupancy rate was higher in US metros where gas prices were considerably lower, such as in metros like Dallas and Houston.
Inflation remains high
The consumer price index (CPI) increased by 0.4% MoM and 8.2% YoY, while the Core CPI, which excludes food and energy, increased by 0.6% MoM and 6.7% YoY, which YoY is the biggest increase since August 1982. As the Federal Reserve continues to increase interest rates, Americans have shifted their opinion of the nation’s central bank. The Survey of Consumers from the University of Michigan – Ann Arbor released new data on US consumer confidence in financial institutions showing a large decrease in the net change in confidence among all financial institutions. Confidence in the Federal Reserve decreased by 6 balance score points between September/October 2021 and August/September 2022. As the Fed continues to raise interest rates to reduce inflation, the US Gallup Poll recently reported that favorable views of the Fed have decreased from 44% in 2021 to 37% in 2022.
Economic Outlook
Labor force participation rates (LFPR) continue to remain below pre-pandemic levels due to factors such as long-term COVID symptoms, caregiving responsibilities, lack of worker interest in joining the labor force, and worker preferences for flexibility and remoteness. Vacancies remain elevated as employers look to fill positions as the ongoing labor shortage continues. Economic projections suggest a high possibility of a global recession due to ongoing geopolitical conflicts, supply chain bottlenecks, and upward pressure on energy & commodity markets which have resulted in higher prices and lower real incomes. Labor shortages remain pervasive as employers seek labor in hard-to-fill jobs within sectors such as food & accommodation, and leisure & hospitality. Workers continue to expect higher wages given the rising costs of living due to upward trending inflation.
The National Association for Business Economists (NABE) recently released the October 2022 NABE Outlook Survey asking a panel of professional forecasters about their views regarding the economic outlook for 2022 and 2023. It was reported that 55% of respondents cited too much monetary tightness as one the biggest downside risks to the US economy through 2023, followed by 15% of respondents citing the energy crisis in Europe. The Federal Reserve’s hawkish approach of raising interest rates has 33% of respondents citing a substantial rise in the unemployment rate given the indirect relationship between inflation and the unemployment rate.
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