The job market is exceptionally strong and unemployment is at a historic low of 3.5%, according to the latest U.S. Department of Labor report. At the same time, however, tech and financial companies are laying off employees in waves.
While the layoffs don’t match other market indicators, the moves indicate that the labor market may be losing some of the steam that propelled U.S. employers to add 4.5 million jobs in 2022. In fact, last year was the best year for job creation since 1940, with the exception of 2021, when employers needed workers following shutdowns during the pandemic, The Wall Street Journal reported.
“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” Andrew Hunter, senior U.S. economist at Capital Economics, told the Journal. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”
Wage increases are slowing, with average hourly earnings rising 0.3% in December from the previous month, down from a 0.4% increase in November, the Journal reported. Federal Reserve Chairman Jerome Powell has said he would like the increases to cool more rapidly to combat inflation.
This year promises its share of challenges as interest rate hikes – over each of the last seven Fed meetings – start making an impact. In a survey of economists by the Journal last fall, 63% predicted a recession this year and a rise in unemployment to 4.7% by December.