Current:Home > InvestIs the US job market beginning to weaken? Friday’s employment report may provide hints-LoTradeCoin
Is the US job market beginning to weaken? Friday’s employment report may provide hints
View Date:2024-12-23 22:05:43
WASHINGTON (AP) — Tentative signs have emerged that the U.S. economy is cooling in a way that would be welcomed by the Federal Reserve’s inflation fighters: Companies are posting fewer available jobs, consumer spending has slipped and wage growth, while still healthy, is gradually slowing.
Those trends mark a contrast from the start of the year, when hiring was robust and Americans were still spending at a solid clip — factors that may have also helped keep inflation stickier than the Fed wanted. Yet with the economy no longer accelerating, economists and financial markets have begun to worry about the opposite scenario: What if the economy weakens more than is needed to cool inflation? Could it eventually turn into a recession?
The U.S. jobs report for May, which the government will issue Friday morning, may offer some insights. Economists have forecast that the report will show that employers added 180,000 jobs in May, about the same as the 175,000 for April. The unemployment rate is expected to have remained at 3.9%, which would mark the 28th straight month in which the rate has stayed below 4% and would be the longest such streak since 1953.
“It’s going to be interesting to understand if the economy is running out of gas or coasting into summer solid hiring,” said Nela Richardson, chief economist at the payroll processor ADP.
Richardson spoke Wednesday after ADP released its own data for May, which showed that employers — excluding government agencies — added 152,000 jobs last month.
If May’s hiring data comes in close to economists’ forecasts, it would fall well below the average monthly gain of 269,000 in the first three months of 2024. Still, a figure of around 180,000 would probably be welcomed as sufficient to keep the economy growing without threatening to overheat it. Steady increases in the number of people with jobs provides support for consumer spending, the primary driver of the economy.
Frank Fiorille, vice president of compliance and data analytics at Paychex, a payroll provider for small businesses, said that hiring actually accelerated among their clients last month.
“That sort of mom-and-pop, Main Street small business — we’re hearing still pretty positive things,” Fiorille said.
Fed officials will be scrutinizing Friday’s data on job growth and pay gains as they consider their next steps on interest rates, in particular when to begin cutting their benchmark rate. In its fight against inflation, the central bank raised its key rate 11 times beginning in March 2022 to its current 22-year peak. When the policymakers meet next week, they are poised to leave their benchmark rate unchanged but will update their economic projections, and Chair Jerome Powell will hold a news conference.
When the Fed began aggressively raising rates, most economists expected the resulting jump in borrowing costs to cause a recession and drive unemployment to painfully high levels. Yet the job market has proved more durable than almost anyone had predicted. Even so, Americans remain generally frustrated by high prices, a continuing source of discontent that could imperil President Joe Biden’s re-election bid.
And now, growing signs suggest that the job market is settling back to something close to a pre-pandemic normal. The number of open jobs fell sharply in April for a second straight month, the government reported Tuesday, to the lowest level in three years. Still, openings remain well above pre-pandemic levels.
And the number of Americans who are quitting their jobs has also fallen back to pre-pandemic levels, a sharp shift from two years ago, when quits soared to record highs in the economic recovery from the pandemic. Workers typically quit when they have — or think they can find — a new, often higher-paying job, so the slowdown in quits has helped cool wage growth. Milder pay increases can help slow inflation because companies typically pass on their higher labor costs to their customers by raising prices.
A key reason why the economy is still producing solid net job growth is that layoffs remain at historic lows. Just 1.5 million people lost jobs in April. That’s the lowest monthly figure on record — outside of the peak pandemic period — in data going back 24 years.
After struggling to fill jobs for several years, it turns out, most employers are reluctant to lay off workers.
veryGood! (92243)
Related
- Katharine Hayhoe’s Post-Election Advice: Fight Fear, Embrace Hope and Work Together
- See Pregnant Hailey Bieber and Justin Bieber Step Out for First Time Since Announcing Baby on the Way
- 'Everyone accused me of catfishing': Zayn Malik says he was kicked off Tinder
- 2 Americans among those arrested at Georgia protest against controversial foreign agents law
- Wildfires burn on both coasts. Is climate change to blame?
- 70 years ago, school integration was a dream many believed could actually happen. It hasn’t
- Assaults on law enforcement in the US reached a 10-year high in 2023, the FBI says
- Seriously, don't drink the raw milk: Social media doubles down despite bird flu outbreak
- Oregon's Dan Lanning, Indiana's Curt Cignetti pocket big bonuses after Week 11 wins
- Ryan Reynolds Reveals Sweet Family Milestone With Blake Lively and Their Kids
Ranking
- Mike Tyson emerges as heavyweight champ among product pitchmen before Jake Paul fight
- New Builders initiative looks to fight polarization by encouraging collaboration and alliances
- Bradley Cooper shares rare red carpet moment with daughter Lea at 'IF' premiere: Watch
- Top-ranked golfer Scottie Scheffler 'definitely' wants to represent Team USA at Paris Olympics
- Opinion: Chris Wallace leaves CNN to go 'where the action' is. Why it matters
- Powerball winning numbers for May 13 drawing: Jackpot grows to $59 million
- Alabama bans lab-grown meat, joining Florida among US states outlawing alternative proteins
- The return of 'Roaring Kitty:' AMC, Gamestop stocks soar as 'meme stock' craze reignites
Recommendation
-
Unexpected pairing: New documentary tells a heartwarming story between Vietnam enemies
-
Jimmy Fallon has hosted 'The Tonight Show' for 10 years. Can he make it 10 more?
-
Caitlin Clark builds on 1999 U.S. soccer team's moment in lifting women's sports
-
Kelly Clarkson confirms medication helped her lose weight: 'It's not' Ozempic
-
Controversial comedian Shane Gillis announces his 'biggest tour yet'
-
Cream cheese recall: Spreads sold at Aldi, Hy-Vee stores recalled over salmonella risk
-
Emmy Russell speaks out on 'American Idol' elimination before 2024 finale: 'God's plan'
-
Harvard students end protest as university agrees to discuss Middle East conflict