The US labor market is giving mixed signals

Last week, US unemployment claims fell unexpectedly to reach 187,000, the lowest level since September 2022, per Labor Department data published yesterday.

It marks the latest example of the US labor market showing surprising resilience in recent months, despite attempts by the Federal Reserve to slow the economy – and the jobs market in particular – through a historic series of interest rate hikes.

• Employee wage gains have outpaced inflation every month dating back to July, while the unemployment rate has bounced between 3.7% and 3.8% for the past five months, per the recently published December jobs report.
• Overall, US unemployment has stayed below 4% for 23 straight months, marking the longest such streak since the 1960s.

But the labor market is also showing signs of uncertainty. Businesses aren’t hiring as aggressively as they were a year ago, per the latest Fed data, while over a dozen major tech companies – including Amazon, Google, Meta, and Spotify – announced layoffs in recent weeks.

• Additionally, the rate at which US employees voluntarily quit fell last month to its lowest level since February 2021, signaling that workers aren’t as confident in their ability to find other jobs as in recent years.
• And end-of-year cash bonuses for US workers fell an average of 21% in 2023, indicating that employers have grown less concerned about losing talent, per Bloomberg.

👀 Looking ahead… The Federal Reserve, which has left rates alone at its last three meetings following 11 consecutive hikes, is widely expected to begin cutting rates sometime later this year – a move that typically results in higher wages and more job creation across the US economy.

📊 Flash poll: To all our readers in the workforce: How would you rate the current job market in your respective industry?

• Excellent (aka many available opportunities and high wage growth)
• Pretty good
• Average
• Pretty bad
• Terrible (aka few available opportunities and low wage growth)