Hiring, Wage Gains Ease, Pointing to Cooling Jobs Market
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Hiring has been resilient, but has started losing momentum amid layoffs by high-profile companies
For all of 2022, U.S. employers added 4.5 million jobs, the second-best year for job creation on records back to 1940 after 2021, when the labor market rebounded from the pandemic-induced shutdowns and added 6.7 million jobs.
Hiring was resilient throughout 2022 despite an economy that is slowing alongside the Federal Reserve’s aggressive pace of interest rate increases intended to bring down inflation. However, some recent data and a wave of tech and finance industry layoffs suggest the labor market, while still vibrant, might be starting to lose momentum and gains could reverse in the year ahead.
Payrolls grew in leisure and hospitality, healthcare and construction, despite the sharp decline in home sales caused by higher mortgage rates. Employment declined slightly in the tech-heavy information sector and among couriers and messengers and warehouse and storage workers.
Wage growth continued to cool.
Still, there are signs of cooling in certain industries: Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic. On Wednesday, Salesforce Inc. said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that Amazon.com Inc. would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as Facebook parent Meta Platforms Inc., DoorDash Inc. and Snap Inc. have also recently cut positions.
Companies in the interest-rate-sensitive housing and finance sectors, including Redfin Corp., Morgan Stanley, and Goldman Sachs Group Inc., have also moved to reduce staff.
This year could be more challenging for the labor market as the economy absorbs the impact of slowing global growth and the lagged effect of higher interest rates. Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They also see the unemployment rate rising to 4.7% by December 2023.
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