Nov 1, 2022 - Economy

The labor market is still hot

Illustration of a thermometer shaped like an upwards arrow, with the mercury rising.

Illustration: Brendan Lynch/Axios

New labor market figures out Tuesday show that despite all the recession chatter of the last few months, jobs remain abundant and layoffs few.

Why it matters: The data is backward-looking and subject to notable revisions. But even more up-to-date job market indicators — including low levels of people filing for unemployment — tell a similar story. Even with historically aggressive monetary tightening and gloomy vibes, the labor market still has plenty of the features it enjoyed at the height of the economy's boom times.

Driving the news: The number of job openings actually rose by 437,000 in September, and revisions to August data showed a smaller drop than first reported. Overall, it looks like American employers are still seeking more workers than they can find.

  • The tight labor market that has come to define the pandemic-era economy (briefly) appeared to be loosening up this summer, with data suggesting that employers were cutting back on job openings. But that trend did not continue.

By the numbers: Layoffs edged down, holding at the lowest level on record. Roughly 4.1 million workers quit their jobs in September. That's down from the peak 4.5 million who did the same last November, but there is still more job-hopping than in any other period outside of the pandemic.

  • All of it suggests a labor market that is still quite hot. Employers have a huge appetite for more workers and aren't letting go of the employees they do have. The still-elevated level of quits mean workers are confident enough about better job prospects — and, likely, higher pay — to leave their current jobs.

Yes, but: This is one of those moments when good news = bad news. That's because the new numbers will be viewed with concern by the Fed, a sign that the labor market is still "unsustainably hot," as chair Jerome Powell has said.

  • In the Fed's ideal scenario, employers' demand for workers slows, but companies, for the most part, hold on to staff they already have. That would translate into a sharp drop in job openings alongside a subdued level of layoffs. The opposite happened in September, according to the new data out Tuesday.
  • The risk is that the labor market is displaying so much momentum that it will take even more aggressive rate increases to slow it down, with all the collateral damage that will entail.
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