The post-pandemic boom in hiring appears to be over, as businesses in the United States are now adding fewer workers. This raises an important question: will the slowdown in employment continue?
The Forecast
According to experts, it is projected that the United States will add 170,000 jobs in September. This will mark the fourth consecutive month where job growth remains below 200,000, a trend last observed in 2018.
Even though these small increases have been able to accommodate the influx of new individuals joining the labor market each month, Federal Reserve officials argue that the economy does not need more than 75,000 to 100,000 jobs monthly. Going beyond this range could worsen the ongoing labor shortage, which is already being described as the most severe since World War II. In turn, it could lead to an increase in wages and present challenges for the Federal Reserve in controlling inflation.
Interestingly, a separate report by ADP suggests that the private sector only added 89,000 jobs in September. However, it is worth noting that this report has a less reliable track record when it comes to accurately predicting the increase reflected in the government’s official jobs estimate.
Unemployment Rate
The percentage of jobless Americans actively seeking work is expected to decrease slightly from 3.8% to 3.7%.
The Impact of Jobless Rate and Wages on the Economy
The jobless rate saw a slight increase of three-tenths of a point in August. However, this rise can be attributed to younger individuals opting to remain employed a bit longer before going back to school. Fortunately, this does not indicate a significant surge in layoffs. In fact, the number of individuals applying for jobless benefits has decreased substantially and is currently at pandemic-era lows, with approximately 200,000 applications. In comparison, during economic downturns, this number usually exceeds 300,000.
While the job market remains relatively stable, there are expectations for a 0.3% increase in average hourly wages in September. This projection exceeds the previous month’s growth rate and is in line with the Federal Reserve’s preferences. However, the Fed would ideally prefer slightly smaller monthly increases.
Unfortunately, the rise in wages over the past year is forecasted to remain at 4.3%. Although an impressive figure, it is considered too high for the Federal Reserve’s liking. Central-bank officials argue that annual wage growth needs to slow down to a range of 2% to 3% in order to aid the Fed in its ongoing battle against inflation. These levels of wage growth were observed before the pandemic and are viewed as more sustainable.
Potential Impact of Labor-Union Strikes
In addition to the aforementioned economic factors, there are other elements that may affect employment growth or unemployment rates in September. The extended strike initiated by auto workers has the potential to exert pressure on employment figures. However, this negative effect might be mitigated by the return of Hollywood writers following the resolution of the Screen Actors Guild strike last month.
Overall, it is crucial to monitor these economic indicators and fluctuations closely as they greatly influence the health and stability of the economy.
