Welcome to our monthly video series on the jobs reports featuring our Chief Economist Sania Khan and Vice President, Market Strategy, Jason Cerrato. Every Friday morning after the reports are released, grab a cup of coffee and join them for the latest on the jobs numbers.
The labor market is still alive and somewhat kicking, according to the latest U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey report (JOLTS).
Job openings remained stable at 9.6 million, surpassing expectations and sustaining an elevated trend. This indicates a sense of confidence among workers, as shown by the quits rate which held steady at 2.3%, reverting to pre-pandemic norms after a peak of 3% in late 2021 and early 2022.
However, hiring rates showed variation across sectors. Overall at 2.7%, leisure and hospitality reported a 7.1% rate, with finance and insurance slowing down to 1.8%.
Layoffs remain below pre-pandemic levels at 1.5 million. A major driver of this is the economy remains relatively healthy, with robust GDP growth in the last quarter due to retail sales. With retail hiring expected to stay consistent with last year at 4.7%, and given the 4% YOY increase in consumer spending, demand for retail workers is expected to stay strong.
Yet there are indications of a lagging confidence among consumers. Both the Conference Board’s leading indicator index and the University of Michigan’s consumer sentiment survey hint at declining consumer confidence in the economy. Additionally, a Harris poll found that 44% of middle-class respondents anticipate a bleaker economic outlook over the next five years, a sentiment even more pessimistic than during the Great Recession (2007-09) when unemployment exceeded 9%.
The BLS’ Employment Situation Report suggested a moderate decline in economic momentum, with 150,000 jobs added. Adjusting for the 30,000 auto workers who were out on strike earlier in the month, the corrected job gains figures align closely with recent trends. The unemployment rate nudged up slightly to 3.9 percent from September’s 3.8 percent. It has been below 4 percent for nearly two years.
There are early indications that wage growth is beginning to moderate as hourly earnings are tapering. However, the Employment Cost Index for the third quarter, which provides a more comprehensive view of worker compensation, rose by 1.1 percent. This suggests that employers are still increasing pay to attract and retain talent, signaling that the labor market remains warm.
The finance and insurance industry sector is slowing, as those jobs have slightly diminished by 7,800 positions compared to the previous month. This hiring slowdown in finance reflects what’s happening in the industry — higher interest rates have made banks more cautious, prioritizing creditworthy clients and approving smaller loans, which is a conservative stance that is also influencing staffing decisions. Wall Street is also bracing for lower bonuses this year.
Significant job gains were seen in health care, government, and social assistance. Even with the gains, the health care industry is in a precarious situation with the onslaught of an aging population and a shortage of workers, especially nurses.
Here are our expert’s key takeaways from the latest jobs reports:
- Finance and insurance sectors hiring decelerations are related to what’s currently happening in banking. Elevated interest rates have led to banks being more selective with lending and making smaller loans.
- Demand for retail workers will remain strong. The economy and spending remains strong, with 4% YOY consumer spending.
- Health care is hiring, but still facing a critical staffing shortage, especially in nursing.
- Other professions facing critical shortages include: Child care workers, teachers, and construction workers.
- The economic outlook is gloomy for many. A Harris poll found that 44% of middle-class respondents anticipate a bleaker economic outlook over the next five years, a sentiment even more pessimistic than during the financial crisis or the Great Recession.
Watch the entire conversation here: