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The labor market in the United States has begun to show signs of wear despite the 223,000 jobs that employers created last December, according to this Friday’s report from the Bureau of Labor Statistics.
The slowdown in the economy is finding more and more signs that, finally, the rate hike that the Federal Reserve (Fed) undertook since the first half of last year has begun to have an effect, by lead companies to curb hiring.
However, the other key labor market indicator continues to show signs of strength, as the unemployment rate fell in December to 3.5%which brought it back to the lowest point since before the pandemic.
The labor market has become a key indicator for the Fed in its race to cool the economy and bring inflation back to the 2% target, but also for stock markets.
But as long as the labor market remains dynamic, it will be difficult for the Fed to succeed in its crusade against inflation, as companies They will keep up the pace to raise their prices. and consumers will stretch wages to pay for them.
However, the December data is almost two times lower than that of a year ago, in December 2021, when the BLS reported the creation of almost 600,000 jobs, which gives a clear signal that the job market is indeed cooling off.
Post-pandemic changes also restrict work
In the past year, employers have dealt with many trouble hiring employees and, also, to maintain their workforces that found dozens of opportunities to change companies.
This led to unemployment aid claims fell to their lowest levels in yearssince the market offered more jobs than workers seeking employment.
However, things are changing, mainly for sectors that had notable growth during the pandemic.
The weakening of the labor market has been particularly evident in sectors such as product transportation, manufacturing and retail trade, which have begun to reduce hiring or to undertake layoffs to adjust their costs.
Contrary to the companies that grew during the pandemic, other sectors that are now recovering, such as hotels, restaurants and entertainment venues, are seeking fill the jobs they lost during the shutdown of the economy.
However, the services sectors, which have seen their prices increase to a greater extent compared to those of products, could face a new stage of difficulties, since household savings also show signs of weakening and therefore less cost.
In this dynamic and with the threat of a recession, many employees who decided to withdraw from the labor market during the pandemic are now looking to rejoin companieswhile they seek job stability in the face of a panorama that appears to be complex.
With the December data, 2022 adds 4.5 million jobs created in the last 12 months, although the figure has yet to be reviewed.
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