Friday’s jobs report could be telling as recession worries mount

The monthly government employment outlook from the Bureau of Labor Statistics is expected to show continued strength – weaker, but still significant job gains of around 272,700 and an unemployment rate holding steady at 3.6%, according to Refinitiv estimates.

The report follows a mixed bag of recent jobs data: The latest job vacancies and labor turnover survey, released on Wednesday, showed there were 11.3 million job vacancies in May, ie 1.9 positions for each job seeker, and a historically low level. layoff levels.

While this is good news for job seekers, there are also signs that employers are starting to cut spending. New data on job cuts released Thursday by Challenger, Gray & Christmas revealed that U.S. employers announced 32,517 layoffs in June, a 58.8% increase from the same month last year and the total highest monthly since February 2021. Total job cuts in the first six months of the year, however, are down 37% from the first half of last year and are at their lowest levels low since records began in 1993.
The US labor market is clearly not in recession. However, unemployment can be a lagging indicator. In recent weeks, major companies in the technology and real estate sectors have announced layoffs (including Netflix, Tesla and Redfin) or signaled that they are abandoning their hiring plans (such as Meta, Twitter and Apple) .
Details of Friday’s jobs data could help economists, policymakers and business leaders determine whether this recent string of layoff announcements and hiring freezes are just industry-centric corrections. after years of uncontrolled growth, one-off company-specific events or more general signs of weakness.
Historically high inflation has prompted the Federal Reserve to embark on a campaign of interest rate hikes to calm the economy, but these efforts are not without costs: when companies tighten their belts, it usually leads to cuts jobs.
Fed Chairman Jerome Powell said he was aware that rate hikes could cause “pains” in the labor market, but also expressed hope that, if successful, policy measures could allow the economy to continue to grow while controlling inflation. The latest Fed projections call for the unemployment rate to hit 4.1% in 2024.

“We are already seeing some companies start to cut hiring, whether by freezing hiring or simply moving more slowly to fill their existing job openings,” said Daniel Zhao, senior economist at Glassdoor. “It’s the first step companies take when they expect the economy to slow down. Invariably, if there’s a recession, there’s likely to be layoffs, but the hope is that if the recession is mild, layoffs will happen.” be contained, and any increase in unemployment will therefore be smaller.”

More broadly, the U.S. labor market is still in a period of incredibly high demand for workers, said Layla O’Kane, senior economist for labor market data firm Lightcast.

“We are seeing very high openings and very low separations,” she said, referring to the latest JOLTS data. “Right now, companies are still looking for a ton of workers and trying to fill those positions. I’d be surprised if the job market turns into a tough market for workers anytime soon.”

CNN’s Nicole Goodkind contributed to this report.

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