- On June 18, 2022
You may be guessing the job market is slowing down. The WSJ confirms this: “Nearly every labor indicator suggests the hottest market in half a century is starting to cool.”
Here are the five indicators economists are watching:
- Labor demand. Right now it’s strong but moderating. The peak was March at 11.9 million job openings and slipped to 11.4 million in April. But, as noted by the Fed, there are still two jobs for every person seeking work.
- Layoffs (the leading indicator of recession). Economists measure layoffs by jobless claims, which have been climbing from a historic low in March (166,000) and reflecting recent layoffs in tech, retail, and real estate. Current jobless claims are at 229,000 and still “far too low to indicate a recession is imminent,” but the rise “signals that the labor market is easing.”
- Pay gains. Wage growth is “showing signs of decelerating” from a peak of 5.6% in March to 5.2% in May.
- Unemployment rate. It’s been at 3.6% for three months straight, which is “near the prepandemic half-century low of 3.5%” but projected to rise to 3.7% by end of this year and 4.1% the following year. It could go higher if consumers spend less.
- Quits rate. The share of workers leaving their jobs was at a record high of 3% December 2021 due to “bright job market prospects” but down incrementally in April to 2.9%.
The WSJ reports that employers are still hiring and layoffs low, but the labor market has likely peaked. Watch the above signals if you are figuring out whether you should change jobs.