ShreeMetalPrices: Job Growth has Slowed but Held Intact, Causing Markets to Fall on Fears of Steep Hikes.


Employers added a still-reliable 263,000 jobs in September, slowing the nation’s employment growth for the second consecutive month. This indicates that the labour market’s resilience is now being hammered by high inflation, increasing interest rates, and a slowing economy.

The Labor Department said on Friday that the jobless rate decreased from 3.7% to 3.5%, regaining a 50-year low. But the main reason for this is because, despite an increase in payrolls, 57,000 Americans left the labour force. Which is made up of those who are employed or searching for work.

According to a study of economists, 250,000 new jobs were added in the previous month. Although the actual gain exceeded that projection, it was still the weakest gain since April 2021.

Despite the economy’s difficulties and the Federal Reserve’s campaign to contain increasing expenses by making credit more expensive for consumers and businesses.

The job market has been extraordinarily robust this year, recording monthly average gains of more than 400,000. In order to prevent being caught off guard when business picks up again, worker shortages have pushed many firms to keep hiring and avoid terminating employees.

According to Gus Faucher, chief economist of PNC Financial Services Group. “Job growth has slowed significantly over the course of 2022 as economic growth has faltered but remains considerably above its pre-pandemic level.”

What does the Fresh Jobs Report Mean?

The Fed is closely examining the changes in employment that occur on a monthly basis to determine whether inflation is slowing down enough for officials to halt the most pronounced rate increases since the early 1980s.

These price rises have crushed the stock market and stoked recessionary fears.
The percentage of adults working or looking for employment decreased to 62.3% last month. Which is much lower than the 63.4% pre-pandemic figure and suggests that there may still be a labour shortage.

As people returned to a hot labour market after taking care of children or remaining home out of concern for COVID-19. The labour force participation rate, which had been generally growing, increased substantially in August.

Is the Job Market Still Sturdy?

The decline in September indicates that it might continue to be difficult to find workers, which would raise pay increases.

That would probably increase already high inflation, which is just below a 40-year high.
Average hourly salaries increased by 0.3%, 10 cents to $32.46 in the past month. Somewhat reducing the annual increase from 5.2% in August to 5%.

According to experts, the Fed’s decision to authorise a further significant three-quarter point interest rate hike in early November will likely be influenced by the resumption of the participation reduction. The decline in unemployment, and the strong job growth.

According to Jason Schenker, chief executive officer of Prestige Economics. The study “remains a green signal for additional Fed rate hikes and higher interest rates.

Why are Stocks Falling?

After the report was out, stocks fell. The Dow Jones Industrial Average decreased 2.1% for the day. The Nasdaq plummeted 3.8% and the S&P 500 declined 2.8%. US Treasury note yields increased sharply, with the 2-year note reaching about 4.3% and the 10-year at 3.9%.

Markets fear that the Fed may see Friday’s report as evidence that the economy hasn’t yet slowed down sufficiently to bring inflation under control. That might open the door for persistent, forceful increases in interest rates. Which, if made too forcefully, run the risk of sparking a recession.

What Industry is Currently Hiring?

Despite falling 1.1 million below of its pre-COVID level. The sector that was most severely impacted by the pandemic—leisure and hospitality.

Which includes restaurants and bars—led the job increases with 83,000. Added 60,000 were medical services, and 46,000 were professional and commercial services.

Despite a strong currency hurting exports, manufacturing generated 22,000 jobs as American consumers continued to purchase goods. With businesses still scrambling to hire workers due to persistent labour shortages despite the housing market slowdown. Construction saw an increase of 19,000 personnel.

However, the public sector lost 25,000 jobs, primarily because after seasonal adjustments, fewer school employees started working last month than they had before the outbreak.

Is a Recession on the Way in 2023?

The nation will enter a recession next year, according to many experts. And the uncertainty is already having an impact on hiring. From over 500,000 in July to approximately 300,000 in August, payroll gains slowed.

Job vacancies, a leading indicator of future employment, declined precipitously over that time from an almost record 11.2 million to a still healthy 10.1 million.

There are 1.7 open positions for every unemployed individual, giving workers some negotiating leverage. However, that’s down from two opportunities per unemployed person the month before.

Initial claims for Jobless claims, an indicator of layoffs, increased last week to their highest level since late August but remained historically low. According to the outplacement agency Challenger Gray & Christmas, firms revealed plans to hire 380,000 people last month, the fewest in September since 2011. Announced job cutbacks increased by 46% last month.

Moreover, employment was reduced last month. According to Goldman Sachs, 1.3 million youths and young adults were hired by employers for the summer. And the majority of them went back to school.

Is There Going to be a Labour Shortage in 2022?

The majority of industries are still experiencing a manpower shortage, but despite the gloomier economic forecast, many businesses have decided against making any layoffs.

Companies still don’t want to lose the talent they’ve worked so hard to get, especially tech-skilled personnel, according to Nicola Hancock, managing director of the Americas region for AMS, a firm that specialises in talent acquisition and consultancy services.

Even though the U.S. economy is shrinking, we are still dealing with the most excruciating skills deficit we have ever known.”

The end result is a peculiar divide in a contracting labour market. With some firms becoming more cautious while others continue to hire or at the very least refrain from job layoffs.

Airlines and the hospitality industry, for instance, are still playing catch-up after the pandemic, according to Hancock.

The 32-year-old isn’t anxious about landing a new job. But he is apprehensive about having to accept a pay drop after receiving consistent rises at the centre throughout the course of his four-year employment. He claims, “There are jobs there.” “I’m sure I’ll find something,” she said.

What is the forecast for the job market?

Now that the country has recovered every one of the 22 million jobs lost during the health crisis and high inflation and interest rates are beginning to slow down consumer and business spending, many analysts anticipate that the job market will lose steam more quickly.

According to Moody’s Analytics, monthly gains will probably decrease to around 100,000 by the end of the year.