ZipRecruiter\u2019s chief economist Julia Pollak called<\/a> a more reliable indicator of labor market strength, increased by 250,000 to four million in May.<\/p>\nOverall, there were 5.9 million workers who separated from their employers in May, a number that remained relatively unchanged. About 1.6 million workers were laid off in May, a slight drop from April\u2014and that level is likely to continue falling. The outplacement firm Challenger, Gray & Christmas reported there were about 80,089 layoff announcements in May, but that dropped to just 40,709 in June.\u00a0<\/p>\n
The bottom line is that Thursday\u2019s Jolts report shows a \u201cgradually slowing, yet still-robust labor market, one that is cooler than a year ago but still hot,\u201d wrote Nick Bunker, Indeed Hiring Lab\u2019s research director.<\/p>\n
Those numbers aren\u2019t exactly good news for Federal Reserve officials, who are hoping to significantly cool the labor market as they attempt to bring down inflation. If Americans continue to see plentiful jobs and employers lure workers onboard with higher wages, it is unlikely that inflation will continue to moderate. That would force the Fed to continue its agenda of aggressive increases to interest rates.<\/p>\n
Stock prices fell and bond yields rose in response to the data. The
\n S&P 500
\n was down 0.8% early Thursday afternoon, while the
\n Dow Jones Industrial Average
\n had fallen 1.1%. The
\n Nasdaq Composite
\n lost 0.9%. <\/p>\n
Still, the labor picture is more complicated than the headlines would suggest, and there are nuances that could indicate the Fed\u2019s rate hikes are having an impact, Richardson said. During June, for instance, ADP saw job declines within interest-rate-sensitive industries. There continues to be a pullback in hiring among large employers.\u00a0<\/p>\n
In another somewhat positive sign, initial claims for unemployment benefits came in higher than expected at 248,000 in the week ended July 1. But even though jobless claims have gradually risen during the first half of the year, the rate remains historically low.\u00a0<\/p>\n
Overall, ADP found the pace of hiring is uneven across industries. Lower-paying industries like leisure and hospitality are the ones adding jobs, while those that historically have offered higher wages, such as information and finance, are cutting back.\u00a0<\/p>\n
Fed staff also seem to be looking beyond the headline numbers, suggesting that \u201cjob growth may have been weaker than indicated by payroll employment\u201d reports, according to the minutes from the June Federal Open Market Committee meeting released this week. Moreover, Fed officials continue to predict that \u201cemployment growth would likely slow further, consistent with their projections of below-trend economic growth,\u201d according to the minutes.<\/p>\n
Wage growth is another area where there seems to be some good news for the Fed. ADP reported a substantial slowdown in pay increases. Americans who changed jobs saw pay gains slow to 11.2% in June, the slowest pace of growth since October 2021. Those who stayed in their jobs saw a 6.4% year-over-year pay increase, down from the 6.6% recorded in May, according to ADP.<\/p>\n
In fact, Richardson said the industries that had some of the biggest job gains generally also saw declining pay growth, indicating that the labor-supply issues that plagued employers during the Covid-19 pandemic have eased.<\/p>\n
Friday\u2019s jobs report will provide more information about wage growth, of course, but during the June FOMC meeting, policy makers noted that the slowdown in pay increases was still too small to fit with the bank\u2019s goal of 2% inflation. <\/p>\n
Friday\u2019s job report will be released at 8:30 a.m. Eastern.<\/p>\n
Write to Megan Leonhardt at megan.leonhardt@barrons.com<\/p>\n<\/p><\/div>\n