People work at a restaurant in Chelsea Market in Manhattan on February 2, 2024 in New York City.
Spencer Pratt | Getty Images
U.S. job growth likely slowed in February as businesses continued to maintain demand for workers, but it was still a long way from stalling.
When the nonfarm payrolls report is released at 8:30 a.m. ET on Friday, it is expected to show a gain of 198,000 jobs, with the unemployment rate holding steady at 3.7%, according to Dow Jones consensus estimates.
If the forecast is anywhere near accurate, it would mark a sharp decline from January’s explosive growth of 353,000, but still represent a fairly active labor market.
“This is a cautious labor market. Employers are hiring to keep up with business activity,” said Julia Pollak, chief economist at ZipRecruiter. “Many businesses are still reporting higher than expected sales. But they are not actively hiring. To achieve growth and expansion. To this end, many companies are still adopting a wait-and-see approach.”
Employment rose sharply by 333,000 in December, and a surge in employment in January seemed to offset the worrying hiring sentiment.
However, Pollack noted that both numbers were inflated due to seasonal distortions, especially as retailers cut fewer holiday jobs than expected. However, growth in February could be as high as 240,000 as companies seek to fill more open positions, Pollak said.
Too much growth?
Zip Recruitment Quarterly job seeker survey Expectations for the medium-term outlook hit a series of new highs, while applicants also expressed stronger confidence in their financial situation and the current state of the labor market.
Under normal circumstances, these are positive attributes. But now there are other concerns.
A still-hot job market could prevent the Federal Reserve from cutting interest rates as expected this year.Earlier this week, the president of the Federal Reserve Bank of Atlanta Raphael Bostick expresses concern After central banks begin to ease, the business community may unleash potential “pent-up exuberance.”
“Once the rate cuts start happening, it’s going to give a boost to some of the industries that they’ve been waiting for, especially in terms of capital investment,” Pollack said. “A lot of companies are still hesitant and waiting. Manufacturing is going to be a very interesting area to watch. Job openings in durable goods manufacturing have improved recently. The checks are in the mail.”
Markets expect the Fed to begin cutting interest rates in June, but the outlook has become less certain in recent weeks as policymakers weigh the direction of inflation.
Businesses continue to push for hiring despite uncertainty over monetary policy.
There are mixed signs about layoffs. It was February with the most announced layoffs since 2009, but workers appeared to be able to find other jobs quickly, as evidenced by little change in the Labor Department’s weekly unemployment claims, according to Challenger, Gray & Christmas.
of the department Job vacancy and labor turnover surveys January data released earlier this week showed that the number of layoffs actually decreased that month, down nearly 16% from the same period last year. Job openings changed little this month, but are down 15% from the same period in 2023. The ratio of job openings to available workers was 1.4 to 1, down from 1.8 to 1 in the same period last year.
“I don’t see layoffs,” said Tom Gimbel, founder and CEO of LaSalle Network, a staffing and recruiting firm. “I keep seeing the small and mid-sized market chasing market share, and hiring seems to be in that range. They’re hiring people that the big companies, especially the big tech companies, are laying off.”
Demand remains strong
In fact, the ongoing layoffs at tech giants have been making headlines recently.This trend continued into February as Job Placement Website Indeed According to the report, software development job postings fell by 28%, and information design and document postings fell by 26%.
But other industries still show demand. The number of positions for physicians and surgeons surged 102%, for therapists 83%, and for civil engineers 82%.
The Federal Reserve found in its latest survey of economic conditions that the extremely tight labor market has eased, but there is still active funding.
“Businesses generally find it easier to fill open positions and find qualified applicants, although difficulties remain in attracting workers for high-skilled positions, including health care professionals, engineers, and skilled industry specialists such as welders and machinists,” the Fed said in the report. . ” Beige Book Report Published Wednesday.
The report, released two weeks before each Fed meeting, helps policymakers understand trends across the economy. Business contacts note that wages continue to rise, but at a slower pace. Wage growth is an important part of solving the inflation puzzle.
Friday’s report expects average hourly earnings to grow just 0.2% this month, down from January’s 0.6% gain but still growing at a 4.4% pace. January’s large monthly change was primarily due to a decline in the average workweek, which boosted the performance of average hourly earnings.
Despite higher-than-expected inflation data, Federal Reserve Chairman Jerome Powell said on Thursday that the central bank is “not far off” from becoming confident enough in the trajectory of inflation to begin cutting interest rates.
“The increase in hourly wages is largely driven by two factors: more liberal cities and worker shortages caused by COVID-19,” Kimbell said. “I don’t think wages will increase much this year.”