Topline
The labor market continues to add jobs at a rapid clip even as many major employers keep slashing thousands of jobs, but a lagging technology sector and a slew of other industries struggling to add jobs illustrate the potential difficulties that could spread across the economy later this year.
Key Facts
The job market has consistently performed better than economist projections in recent months, adding back nearly 1.6 million jobs since last year in a sign of “robust” growth, Federal Reserve officials have said.
However, beyond the robust gains, the latest jobs data have been “full of contradictions,” says CIBC Private Wealth chief investment officer David Donabedian, who notes wage growth has slowed down and households have actually reported increased unemployment—despite the overall growth (a potential sign of more people taking on multiple jobs).
According to the Labor Department, the information technology industry, which includes giants such as Microsoft and Oracle, is the only sector reporting negative job growth this year, losing some 36,000 jobs, compared to a nearly 100,000 uptick in the same time frame last year.
Though a long-anticipated recession has yet to materialize (and would fly in the face of recent strong economic data), companies still “appear to be putting the brakes on hiring in anticipation of a slowdown,” says Andrew Challenge of career services firm Challenger Gray, citing mounting layoffs, consumer confidence hitting a six-month low and job openings flattening.
A slew of other industries are barely adding workers: Manufacturing and utilities firms have added less than 11,000 jobs combined this year—far less than the over 200,000 jobs they added over the same period last year.
Employment growth is strong, but “fragmented,” Nela Richardson, chief economist at ADP, said in a recent statement, noting that typically high-paying jobs in industries like tech and finance are becoming more scarce, as lower-paying jobs in leisure and hospitality keep growing.
Industries By Job Growth This Year
What To Watch For
Plans for less hiring and the uptick in layoffs signal “much slower job growth ahead,” Pantheon Macro economists Ian Shepherdson and Kieran Clancy wrote in a Thursday report. They project the unemployment rate could rise from 3.7% to 4.8% by the end of next year—suggesting nearly 2 million people could lose jobs.
Key Background
Despite waves of layoffs hitting some of the nation’s largest tech employers, the unemployment rate fell to a 54-year low of 3.4% in January and has remained near historically low levels this year. Job cuts, however, have only become more widespread, with Ford and Tyson Foods among those cutting more jobs last month. So far this year, companies have announced plans to cut 417,500 jobs, more than quadrupling over the same timeframe last year and the highest for the period since the height of pandemic lockdowns in 2020, when 1.4 million cuts were recorded, according to Challenger Gray.
2023 Layoff Tracker: Pokemon GO Maker Niantic Cuts 230 Jobs (Forbes)
Labor Market Added 339,000 Jobs Last Month (Forbes)
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