What to expect in Friday’s jobs report


Ahead of Friday’s closely watched jobs report, economists polled by Refinitiv said they expected job growth to slow in November, adding just 200,000 jobs.

But while the recent wave of layoffs hitting the tech sector has dominated the news cycle and raised concerns that a larger reckoning may be imminent, labor economists say those fears are overblown.

“All these announcements you heard: 10,000 [layoffs] 10,000 people here and there, basically a very, very small fraction of total employment,” said Daniil Manaenkov, an economic forecaster at the University of Michigan.

Despite a series of sharp layoffs — mostly at tech companies and others that have scaled up during the pandemic — and fears that this is the calm before the storm, the broader labor market has shown little backing off.

“We just haven’t seen these programs go as far as we expected,” said Julia Pollak, a labor economist at the job market ZipRecruiter. “Companies seem to be preparing an escape route, they’re making disaster plans, but they’re preparing for a downturn that hasn’t happened yet.”

Despite the losses, weekly jobless claims rose slightly and remained at levels seen during the economy’s health. The ratio of job vacancies to job applicants is falling slightly — the right direction for the Fed, which hopes weak demand for labor will help curb decades of high inflation.

While rate-sensitive sectors of the economy such as housing, construction and technology are showing some signs of weakness, continued labor market recovery in leisure, hospitality and other services more than makes up for it, Pollack said.

Many industries remain understaffed relative to ongoing business activity; U.S. consumers are still spending because their household finances remain relatively strong overall, and many are completely immune to the Fed’s anti-inflationary measures, she said Impact. This is especially true among higher-income consumers, many of whom have substantially increased their net worth from stock market gains and through refinancing and locking in sub-4% mortgage rates.

“Everything seems to be moving toward a new normal, but it’s not quite back to the pre-pandemic normal,” Pollack said. “It’s a tighter labor market with higher turnover.”

Federal Reserve Chairman Jerome Powell said in a question-and-answer session at an economic forum on Wednesday that a persistent labor supply shortage throughout 2021 is unlikely to completely disappear anytime soon.

Powell said demographics, including lower-than-expected population growth, early retirement, long-term illnesses such as COVID-19, deaths from COVID-19 and plummeting net immigration, are affecting workers.

Policies to support labor supply could ultimately help overall economic growth; however, these are outside the Fed’s purview and will take time to implement.

The labor market is “showing only tentative signs of rebalancing, with wage growth still well above 2% inflation,” he said. “Despite some promising progress, we have a long way to go before restoring price stability.” Way to go.”

But while slower growth and fewer job vacancies have given the Fed some hope that it can achieve a soft landing and lower inflation while minimizing economic and human suffering, many headwinds and uncertainties continue to hover .

“The Fed is battling the worst inflation in the U.S. in more than 40 years, and it’s a global problem,” said Giacomo Santangelo, a Monster economist and senior lecturer in economics at Fordham University. “We have global inflation and when we have a recession, it will be a global recession.”

“We can only hope that the Fed’s previous hikes don’t disrupt the labor market on Friday or a month after Friday, and we’ll see a slow rise in unemployment, not a big one,” he added.

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