A Now Hiring sign is seen inside a Wholefoods store in New York City.
Adam Jeffery | cnbc
The ongoing recession-like situation in the US economy is likely to create more ripples through an otherwise strong jobs market.
“Rolling Recession” has become a popular term these days for what America has suffered since the recession that started in early 2022. as they are in contraction.
The same will be true for the jobs market, which has been strong overall, but has seen weakness in sectors that have been bullish this year, according to the data. from the popular networking site LinkedIn,
In fact, economists out there have identified several sectors that will show varying degrees of tightness this year.
“Labor markets remain tight compared to pre-pandemic levels,” said Rand Guyd, head of economics and global labor markets at LinkedIn. “They are still resilient. They are still strong from what we saw in the pre-pandemic period, but they are slowly slowing down and will continue to slow down over the next few months.”
Various dominoes have already fallen during the rolling-recession period.
Housing posted a sharp decline last year, and the widely followed manufacturing index has been pointing to a contraction for several months. In addition, the Federal Reserve’s most recent Senior Loan Officials Survey noted notably tighter loan conditions, indicating that the recession is affecting the financial sector.
Other regions could follow as economists widely expect the US to see – at best – slow to moderate growth this year.
LinkedIn data, which comes from job postings and other data from the site’s more than 900 million members worldwide, differs from government data in one interesting way.
While an extremely tight labor market is found with the following data more comprehensively from the Bureau of Labor Statistics approximately two open jobs for every available worker, LinkedIn’s “labor market tightness” metric shows a nearly 1-to-1 ratio that appears to be loosening a bit more.
The implications are important.
The Federal Reserve has cited the historic tightness of the labor market as a motivation for this. series of interest rate hikes In order to control inflation. If the LinkedIn data indicates that market trends are unfolding, it could provide incentive for central banks to ease their own tightening measures.
“It all depends on what the Fed does over the next few months,” Guaid said.
For job seekers, the phrase “rolling recession” means that employment in some industries will be easier to obtain, while others will be more difficult.
LinkedIn identifies certain industries as being slack, meaning employers have an easier time filling jobs and don’t need to use as many inducements to find workers. Those industries are government administration, education, and consumer services, where the number of applicants exceeds job openings.
Medium tight markets include technology, entertainment, information and media, professional services, retail property, retail and financial services. In these industries, job applicants are having an easier time finding opportunities while employers are stepping up recruiting efforts.
Extremely tight labor markets include housing, oil and gas, hospice and health care. LinkedIn says that in those areas “employers can’t fill vacancies fast enough.”
Although hospitality continues to lead in expanding payrolls, the industry is still roughly 5.5 million below its pre-pandemic level, according to BLS data. That’s true even though hourly wages for hotels, restaurants, bars and the like collectively increased by about 23%.
“This industry really still wants to hire a lot of people. It’s the tightest industry in the United States,” Ghayad said. “There’s a lot of demand. They’re looking for people. There’s a shortage. They can’t find people so these industries, services, industries, housing and anything related to food or entertainment are booming.”
From a business perspective, Ghayed said there are four industries that are recession proof: government, utilities, education and consumer services. He doesn’t expect to see any significant slowdown in hiring there.
Despite the seemingly healthy labor market, many economists believe a broader recession is still to come.
A recession survey The Wall Street Journal sees a roughly 61% chance of a contraction, and New York Fed bearish indicator, which tracks the spread between 10-year and 3-month Treasury yields as an indicator, is pointing to a 57% chance of a recession next year. This is the highest level since 1982.
Still, Gayed said he expects hiring to remain strong, even though LinkedIn posts mentioning words like “layoffs,” “recession” and “open for work” have been on the rise in recent months.
“We don’t expect any potential downturn to have a significant impact on labor markets,” he said. “We’re in great shape right now. There’s been some cooling off, but … the labor market remains the brightest spot in the US economy.”