Even employment in Information has been rising for months despite layoff announcements, after a dip last year. Month-to-month wage growth re-accelerated.
By Wolf Richter for WOLF STREET.
We’ve been waiting for the landing now for a year – soft or otherwise. The Fed has jacked up interest rates to over 5%, which a year ago seemed unthinkably high, and everyone has gotten used to it, businesses and consumers. Prices have been rising at a hot pace, though price increases have shifted from gasoline and food and used cars to services, and people and businesses have gotten used to it. Wages have been rising at a similar clip, and everyone has gotten used to that.
Some horribly managed banks collapsed and were dumped into the ditch, and everyone knows there will be a few more banks to get dumped into the ditch, and so what, everyone has gotten used to it. A couple of PE-firm-owned auto dealer-lender chains, specialized in selling overpriced used cars at huge interest rates to subprime customers, collapsed. And there were some fiascos in Commercial Real Estate, and they’ll keep coming.
All the while, employers are hiring, people are working and making more money, and spending it, and the labor market just keeps cruising along at a good altitude. All it has done so far is that it has come down from the stratosphere.
And the soft landing – or any landing – of the labor market that the Fed has been looking for, well, the Fed is just going to have to keep looking for it, because for now the labor market just isn’t landing.
In April, 253,000 jobs were created by employers. There are now a record 155.7 million payroll jobs, based on surveys of establishments by the Bureau of Labor Statistics today. Over the past 3 months on average, 222,000 jobs were created per month. This three-month average, which irons out the month-to-month variability, is at the upper end of the range during the Good Times before the pandemic:
The drop in tech and social media employment is already over. The lay-off announcements we hear are global, and the ones that get into the news are by huge companies, and they’re still hiring, even while they’re laying off people, and the laid off people are quickly hired by other companies.
The Information sector serves as a stand-in for tech and social media companies we hear about. The sector covers only a portion of them; other companies are spread over other sectors. But it gives us an indication.
After a hiring binge through November 2022, the number of employees in Information fell off 1.3% over the next three months through February. But even in this hard-hit sector, employment is resilient and rose again in March and April. Now at 3.1 million, employment is where it had been in June and July last year, and remains below the peak, as companies are rebalancing their work force and wringing out the excesses:
Total jobs, including gig work. In the broader household survey, which includes other types of jobs such as the self-employed and contract work in addition to payroll-type jobs at establishments, showed that 298,000 jobs were created on average over the past three months through April, which is also at the upper end of the range of the good times. This pushed the total of all kinds of jobs to a record 161.0 million.
The number of unemployed people who are actively looking for a job dropped in April to 5.66 million, the lowest in 22 years, according to the Household Survey by the BLS.
The three-month average dropped to 5.81 million, in the same low range as in the prior months, and along with February 2020, the lowest in 22 years.
This is still a very tight labor market, and most people who are getting laid off and fired for other reasons or no reasons are quickly finding other jobs.
The labor force is growing as the tight labor market and rising wages are pulling people back in. In April, the three-month average rose to a new record of 166.7 million people who are either working or actively looking for work:
The prime-age labor participation rate – people aged 24 through 54 either working or actively looking for work – rose to 83.3% in April. The three-month average rose to 83.2%.
Both were the highest since before the Financial Crisis. People in their prime working age are now participating in the labor market, working or actively looking for work, at a rate not seen in 15 years.
The prime-age labor participation rate eliminates the complex issue of the so-called “excess” retirements that have rippled through the labor force during the pandemic.
Wage growth cooled off, but looks like it’s ticking up again.
Average hourly earnings of all employees in April rose by a hot 0.5% from March, the highest month-to-month increase since March last year, and much higher than in the prior months. The three-month average rose by 0.34%, up from a growth rate of 0.28% in the prior month.
Average hourly earnings of production and non-supervisory employees rose by 0.4% in April from March. The three-month average also rose by 0.4%, which, annualized, comes in at just under 5%. These are engineers, teachers, bartenders, technicians, drivers, retail workers, wait staff, construction workers, nurses, etc. in non-supervisory roles.
The month-to-month re-acceleration in wage growth might be an early indication that the decline in the growth rate of wages has ended, and that wage growth is stabilizing somewhere near 5% year-over-year, rather than continuing the downward trajectory that started a year ago (when wages grew 7% year-over-year).
Here’s the three-month-moving average of month-to-month wage growth of production and non-supervisory employees:
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