A man walks past a “Now Hiring” sign in New York City on July 8, 2022. Signs that job growth cooled in September could help ease high inflation unpleasantly.
ANGELA WEISS / AFP via Getty Images
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ANGELA WEISS / AFP via Getty Images
A man walks past a “Now Hiring” sign in New York City on July 8, 2022. Signs that job growth cooled in September could help ease high inflation unpleasantly.
ANGELA WEISS / AFP via Getty Images
Hiring slowed in September, which is a sign that the red-hot job market may be cooling off.
The Department of Labor reported on Friday that US employers added 263,000 jobs last month – a modest drop from the 315,000 jobs added in August. The unemployment rate fell to 3.5%, in line with a half-century low.
For many months, the job opening rate has outstripped the number of unemployed workers, salary increase. The Federal Reserve is eager to see a more balanced job market, as it tries to contain uncomfortably high inflation.
The Fed received some encouraging news earlier in the week, when the Labor Department reported that vacancies fell 10% in August, which means that employers are no longer as eager to find workers as they were a few months ago. At the same time, the recruitment rate is quite stable.
“I think this is good news for the Federal Reserve,” said Nela Richardson, chief economist at payroll processing company ADP. “You’re seeing early-stage demand easing [for workers] but still recruiting. “
Friday’s report showed that manufacturers added 22,000 jobs in September – down from 27,000 in August and 37,000 in July. A survey of factory managers was released earlier this week indicating less overwhelming demand for additional staff.
More than half of factory managers polled said demand for their products seems to be dropping, making them reluctant to hire more workers.
Tim Fiore, who conducted the survey for the Institute for Supply Management, said: “It’s really hard to hire someone this month and let them go in three or four months. So people are being cautious. much more important.”
“Basically, it’s not a layoff,” Fiore said. “Its [hiring] freeze. And when people quit, they won’t be replaced as quickly. So it’s a clear change from where we’ve been for over a year and a half, the last two years. “
However, manufacturing represents a small portion of the overall workforce. One Similar ISM survey of businesses in the service sector found no slowdown in hiring.
Industries with the biggest job gains last month included bars and restaurants (60,000) and healthcare (60,000). Government employment fell by 25,000.
Construction companies continue to hire workers, although home construction activity has slowed due to rising mortgage rates. The construction industry added 19,000 jobs in September – up from 11,000 the previous month.
Find out how many workers are returning to the job market
The US has now replaced all the jobs lost in the early months of the pandemic. Further job growth will depend in part on the number of workers available.
“The more people return to the labor market, the more likely we are to see some easing in hiring conditions and the continuation of these steady returns,” said Richardson.
August saw a large influx of new and returning workers, as nearly 800,000 people joined or returned to the workforce. However, that trend did not continue in September. Friday’s report showed that the labor force fell by 57,000 people last month, which is why the unemployment rate fell.
“If the health impact of COVID-19 continues to decline, I’m optimistic that more workers will return to the workforce,” Fed governor Lisa Cook said Thursday. “But there is a risk that labor supply remains below pre-pandemic trends.”
Shortages of both workers and essential supplies have made it difficult for businesses to keep pace with strong demand for goods and services. As a result, prices have skyrocketed. The Fed initially thought those knots would ease on their own. But despite some encouraging signs – like lumber and a drop in used car prices – Inflation remains high. Prices in August were up 8.3% from a year ago.
Since March, the Fed has aggressively raise interest ratesin an effort to reduce demand and control prices.
Cook and her colleagues on the Fed’s board have made it clear that interest rates will remain elevated until there is convincing evidence that prices are leveling off.
“Inflation is so high, it has to come down, and we’re going to keep it there until the work is done,” Cook said on Thursday. first public speech as central bank policymakers.
