U.S. Jobs: Slowing But Steady Growth Stabilizes Employment Outlook
Since January, the jobs market has been a remarkable source of stability, with slowing but continued growth amidst a raft of other less positive economic indicators these days. That observation remains true for the April jobs report, published on May 5 from the U.S. Bureau of labor statistics.
Unemployment held steady at a continuing near-record low of 3.4 percent, while the number of jobs created came in at 253,000 for April 2023. Right now unemployment rates and the official total count of unemployed persons continue in a range from 3.4 percent to 3.7 percent, and 5.7 million to 6.2 million, respectively.
Likewise, the labor force participation rate (62.6 percent) and the employment-population ratio (60.4 percent) are unchanged for April as well. All this is good news, and speaks to a steady labor market.
Against A Dark Background: Steady, Slowing Growth
The war in Ukraine grinds on, as does the recent banking crisis for which the takeover of Silicon Valley Bank served as a harbinger in early March. Likewise, inflation — at 4.9 percent for April — is still more than double the Fed's 2 percent target, which makes ongoing interest rate hikes more or less inevitable.
Yet employment continues to grow slowly but surely even in the face of recent tech layoffs and such. What gives? Before speculating on what is supporting stubbornly robust job growth, let’s look at the April numbers.
As compared to the trailing six-month average, April’s numbers are about 13 percent down (253,000 for April vs. a 290,000 trailing 6-month average). If you look at a plot of jobs added over the past six months, that’s almost exactly on that trend line, despite a spike in January and a trough in March of 2023.
The slope of the line indicates a gradual, but gentle decrease in employment for the months ahead. (See this Washington Post story for a representative bar graph from January 2021 through April 2023.)
April 2023 Employment Situation Summary Highlights
Employment continues an upward path for professional and business services, leisure and hospitality, health care and social assistance, with most other sectors fairly flat. Here are some more details:
Professional and business services added 43,000 jobs, 18,000 higher than the trailing six-month average of 25,000. A bump of 45,000 jobs for professional, scientific and technical service jobs was partly offset by a dip in temporary help services of -23,000 for the month.
Healthcare jobs grew by 40,000 in April, down 15 percent from the six-month trailing average of 47,000 jobs in this sector. Ambulatory health care contributed 24,000 of the gain, nursing and residential care 9,000, and hospitals 7,000 of that overall total.
Leisure and hospitality employment increased by 31,000 jobs mostly in food services and drinking establishments (+25,000). This is down substantially from the six-month trailing average of 73,000 (nearly 60 percent). This sector is still down from its pre-pandemic level by 2.4 percent (402,000 jobs).
Social assistance added 25,000 jobs, a bump from the six-month trailing average of 21,000 jobs (16 percent better), of which individual and family services accounted for 21,000 of that total.
Financial services jobs grew by 23,000 for April, after little change in the first quarter of 2023. Of that total, insurance carriers and related activities contributed 15,000, and real estate another 9,000 jobs.
Government employment increased by 23,000 jobs, about half the trailing six-month average of 52,000 jobs. This sector also remains below pre-pandemic levels (1.3 percent or 301,000 jobs).
Resource extraction (mining, quarrying and oil and gas extraction) added a scant 6,000 jobs in April. That sector is up by 102,000 jobs since its recent low in February 2021. The April job gains, such as they were, were almost entirely from the mining sub-sector for the month.
Other sectors that the U.S. BLS tracks — namely, construction, manufacturing, wholesale and retail trades, transportation and warehousing, information, and other services — were all mostly flat for April. Hourly wages rose by 16 cents (half a percent) to $33.36, with the 12-month trailing hourly wage up by 4.4 percent from May 2022.
Workweek and overtime levels are steady (mostly unchanged) as well. February’s jobs-added number was reduced by 78,000 for February, 2023 (326,000 to 248,000), and another 71,000 for March (236,000 to 165,000). That makes the three-month trailing average 222,000, and puts the April number ahead of what could otherwise indicated a steeper decline.
Other Voices on the Jobs Report
The Washington Post paraphrases Fed chairman Jerome Powell as saying that he "remains optimistic that the United States can narrowly avoid a recession thanks to the ongoing resilience of the labor market, which has persevered in the face of more than a year of aggressive interest rate increases."
The Post also cites Adam Ozimek, chief economist at the Economic Innovation Group, who sees things in a good news/bad news light. He observes that neither wage growth nor inflation have come down as much as they need to, while this latest jobs report gives the Fed "comfort that the labor market isn’t rapidly headed towards recession."
Other major indicators are also cooling, with economic growth at 1.1 percent annually (based on the Q1 of 2023 results) and manufacturing outputs and retail sales both falling.
Tech industry association CompTIA’s narrower take on tech employment is also cautiously optimistic. Its May 5 press release reports that tech sector hiring is up by nearly 19,000 jobs in April, but down by 99,000 jobs across the whole economy (including tech sector jobs and tech employment in other parts of the job market).
Unemployment in tech jobs is now at 2.3 percent, and remains comfortably lower than the overall unemployment rate of 3.4 percent. Tim Herbert, chief research officer at CompTIA, sums up April numbers by speaking of "mixed labor market signals" which include "surprisingly strong tech sector employment gains offset by the pause in tech hiring across the economy."
Demand for IT services and customer software development, cloud infrastructure and related jobs, and PC, semiconductor and components manufacturing jobs accounted for the tech sector job gains in April. For more details, see the CompTIA Tech Jobs Report for April 2023.
A Soft Landing Is Still a Landing
I’m reading the tea leaves as indicative of an upcoming recession, but not a severe or prolonged one. That’s what makes it likely — in my opinion, at least — that this does indeed represent a soft landing in the offing. A lot depends on how good a job the Fed does of constraining inflation and containing wage growth.
But clearly this is a case where continued if decelerating job growth continues to mitigate other less positive economic indicators. Let’s hope that things bottom out and then turn around sooner, rather than later. Stay tuned and we'll find out together!