A recent survey showed that the U.S. labor market continues to show signs of slowing down, although layoffs remain very low. Private payrolls rose by just 122,000 in December, ADP data showed, down from 144,000 in November. The slowing pace of job creation comes as a broader trend reflects a “no hire, don’t fire” stagnation, with labor market indicators showing a cooling trend.
The U.S. Department of Labor said initial jobless claims fell to 201,000 in the week ended January 4, which was not only a decrease from the previous week, but also lower than the 215,000 expected. ADP Chief Economist Nela Richardson attributed the labor market’s current stability to low layoffs and declining resignations, which suggest workers are becoming increasingly cautious.
The November Job Openings and Labor Turnover Survey (JOLTS) report showed that the hiring rate fell slightly to 3.3% from 3.4% in October, while the turnover rate fell to 1.9% from 2.1%. Both indicators are currently well below pre-pandemic levels.
As the Fed continues to monitor these developments, Chairman Jerome Powell emphasized in December that while the labor market appears looser than before the pandemic, the cooling process remains “gradual and orderly.” The central bank believes that further cooling is not necessary to achieve its 2% inflation target.
Market analysts including IndexBox Platform Data predict that the upcoming December jobs report may further emphasize these trends, with 163,000 new jobs expected, down from 227,000 in November. However, the unemployment rate is expected to remain stable at 4.2%.
Source: IndexBox Market Intelligence Platform
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