The Monthly Employment Situation Summary, released this morning by the Bureau of Labor Statistics, reported 315,000 added jobs in August, down significantly from July’s 528,000 added jobs. Unemployment rose to 3.7 %. It appears that the labor market is finally cooling off. If the trend continues, the reduction in demand for workers will lower wages, curb inflation, and restore balance to the economy. The ADP Employment Report, released on Wednesday, showed a gain of 132,000 jobs on private payrolls in August, down for the second month in a row. This data suggests companies are adopting a more conservative hiring approach amid economic uncertainty and conflicting market signals.
Wage inflation is the new item on economists’ agendas. Wages have increased in recent months, in part to compensate for the higher cost of living, but it has not been enough to outpace the rate of inflation and higher consumer costs. Now as prices of goods and services settle back down, we could see the disparity between wages and cost of living switch. This would put Americans back on top of the economy and hold off a wage-price spiral that could send inflation surging yet again. The Fed is keeping a close eye on wage data as other economic factors indicate that inflation is letting up, lessoning the danger of a hard landing into a recession.
According to the July Job Openings and Labor Turnover Summary released this past Tuesday, job openings across all industries were little changed. The most notable sector was transportation, warehousing, and utilities, which reported an increase of 81,000 job openings, 65,000 separations, and 39,000 quits. Job openings also increased within arts, entertainment, and recreation, and federal government. Quits decreased with healthcare and social assistance.
Americans are looking toward a soft landing for the economy in the coming months. Gas prices are slowly coming down, another welcome sign that inflation is finally waning. Mortgage rates may be up, but the effects of raising interest rates by the Federal Reserve are starting to show. Buyers pulled back from hot housing markets across the country and desperate sellers have dropped their prices in an effort to entice house hunters.
Total job growth has exceeded pre-pandemic levels by 240,000. Professional and business services added 68,000, with computer systems design and related services added 14,000 jobs, management and technical consulting services added 13,000, and architectural and engineering services added 10,000. The sector as a whole is up 1.1 million jobs over the past 12 months. Health care added 48,000 jobs in August, with notable gains in physicians, hospitals, and nursing and residential care facilities. Retail trade added 48,000 jobs. Manufacturing added 22,000 jobs, 19,000 of which were in durable goods industries.
-Sean Macari
Sean Macari is the Chief Executive Officer and owner of Valiant Search, an executive search firm headquartered in Albany, New York that recruits and places attorneys and legal support for law firms and legal departments. He can be reached at (518) 732-7848 or info@valiantsearch.com. For more information on Valiant Search, please visit www.valiantsearch.com.
