Bureau of Labor Statistics: Modest, Stable Growth in Labor Market
Today's data from the Bureau of Labor Statistics indicates that the labor market is growing at a modest, stable pace. This could give the Federal Reserve room to proceed cautiously with further interest rate hikes, so as not to create undue economi[...]
The latest data from the Bureau of Labor Statistics shows that the labor market is growing at a modest, stable pace. This is good news for the economy, as it indicates that job and wage growth have moderated to a point where they are not exerting inflationary pressures. This could create the policy space for the Federal Reserve to proceed cautiously with further interest rate hikes, so as not to create unnecessary economic pain.
It's clear that job growth is slowing down, but it's still positive overall. This is good news for the economy, but it's worth keeping an eye on in the future to make sure that the trend doesn't continue.
It is clear that the economy has slowed down from its previous pace, but it is still managing to avoid a recession. This highlights the underlying strength of the economy, despite the massive headwinds it has faced from the war in Ukraine, continued supply chain disruptions from the Covid pandemic, and aggressive monetary tightening by the Federal Reserve. Job growth has remained positive throughout all of this, which is a testament to the resilience of the economy.
It's clear that the economy is still going strong, despite some concerns about interest rates. Manufacturing and construction continue to add jobs, suggesting that businesses are still investing and expanding. This is good news for continued positive economic growth.
It is good to see that the economy has avoided a recession so far. However, other data points highlight the ongoing slowdown towards a more stable, sustainable pace. Job growth is now largely in line with population growth, with the employed share of the population staying steady at 60.1% in September 2022. Wage growth for production, nonsupervisory workers has fallen to an annualized rate of 4.3%, down from 8.6% at the end of 2021. As wage growth moderates close to four percent, it falls to levels that are consistent with the Federal Reserve's target inflation of two percent. The unemployment rate fell to 3.5% because people left the labor market rather than a massive hiring spree. This is yet another sign that economic and job growth are softening. In line with that, there are some indications that companies are able to managing their labor force better than in the past without massive wage and benefit increases. Average hours went up after dropping the month before. Put differently, businesses hoarded labor in August and then expanded hours for their existing workforce in September when conditions warranted that. The number of people working part-time due to economic reasons dropped substantially by 306,000 in September with most people likely finding full-time employment during that month. Employers expanded work for existing workers rather than trying to lure a lot of new employees with higher wages and additional benefits. All of these indicators reflect a labor market that has reached a stable, sustainable pace in line with fewer inflationary pressures. This slowdown in turn could give the Federal Reserve some room to tread more cautiously.
The labor market is now at a critical juncture. On the one hand, it appears to have reached a comfortable point of modest job growth and manageable wage increases. On the other hand, it still faces massive economic risks that could quickly push the economy into a recession. Policymakers at the Federal Reserve and in Congress will need to pay close attention to the situation and tread cautiously in order to avoid the massive economic pain to society’s most vulnerable that a recession would entail.