Friday’s jobs report is expected to show that the US economy added 200,000 jobs in December, with the unemployment rate holding steady for the third-straight month at 3.7%.
The Labor Department’s final monthly employment tally for 2022 likely brings with it some familiar storylines.
— Job growth is expected to remain robust, although slower than the breakneck pace of historically high job gains during the early stages of economic recovery from the pandemic.
— Workers are still not returning to hard-hit sectors such as leisure and hospitality, public service and child care.
— The strong labor market, while it keeps the economy churning, is a little too consistently vigorous for the Federal Reserve’s needs to reduce inflation by tempering demand.
— The tight labor market needs more workers, and wage growth still hasn’t returned to pre-pandemic levels, which would help quell fears of a wage-price spiral, when higher wages cause price increases that in turn cause higher wages.
Lather, rinse and repeat.
“The preponderance of evidence suggests that the labor market is still nowhere near back to normal,” said Julia Pollak, senior economist with ZipRecruiter online employment marketplace.
Historically tight
The US labor market remains atypically tight — something that was reinforced Wednesday when the Bureau of Labor Statistics released its Job Openings and Labor Turnover Survey (JOLTS) report for November. It showed there were still north of 10.5 million job openings, or about 1.7 available positions for every unemployed person looking for work.
The survey also showed that what has been deemed the “Great Resignation” is still chugging along, Pollak said. During the Covid-19 pandemic, a record number of workers voluntarily quit their jobs in search of greener pastures — be it better working conditions, higher pay, or increased flexibility.
The number of people per month quitting their jobs has now landed above 4 million for 18 months straight. In the two decades leading up to the pandemic, the monthly average was 2.6 million.
“Companies are still battling huge retention difficulties,” Pollak said.
The latest JOLTS didn’t show that the market was loosening up as maybe some had hoped or expected. But it did provide a window into some of the divergence that’s occurring at a time when some businesses are hiring more to meet consumer demand while others scale down their operations because of bloat, the rippling effects of high interest rates, or preparation for less fruitful economic times ahead.
Industries such as accommodation and food services reported about 50% fewer layoffs in November than what was seen on average between 2000 and February 2020, Pollak said.
“I think it’s mostly just pre-pandemic recovery,” she said. “Leisure and hospitality is still short hundreds of thousands of workers and just still ramping up, because spending recovered more quickly than staffing.”
As of October 2022, the leisure and hospitality sector was still below pre-pandemic employment levels by more than 1 million jobs, or 6.3%, according to a CNN Business analysis of BLS employment data.