Employment: View From The Peak

Fears of a recession are pervasive. While we can offer rebuttals, the concerns are understandable: volatile financial markets have given most investors a terrible year, inflation has eaten away purchasing power and sentiment surveys have plummeted to new depths.

The persistent strength of the job market has been a pleasant surprise throughout the year. Indeed, the just-released September employment situation summary from the Bureau of Labor Statistics (BLS) continued the streak, with another 263,000 jobs added and the unemployment rate returning to 3.5%. But the beginnings of a job market cooldown are beginning to emerge.

The private sector produces a series of interesting measures of the labor market. Payroll processor ADP publishes monthly employment levels based on aggregations of their large client base. This year, ADP revised its methodology to be an independent estimate of the jobs market, rather than a forecast of the monthly BLS payroll reading. According to this series, gains peaked at over 600,000 jobs in both July and August of last year; since then, they have fallen steadily (to 208,000 in September 2022). Slowing, but still positive.

Several other sources show a corroborating trend. Social network LinkedIn publishes monthly trends of job change activity. Its most recent report, through August, confirmed that employment markets remain active. Its hiring rate (hires as a share of total network members) peaked in October 2021, then fell through summer 2022, but remains comfortably higher than the rate observed just two years ago. LinkedIn’s audience skews toward professional occupations, suggesting corporate turnover peaked a year ago.

Job portal Indeed.com is a broader venue to find a wider assortment of job listings. Indeed’s Hiring Lab continues to report its job posting activity since the pandemic crash, and it is holding above its prior norms. Their peak in job postings was at the end of the year 2021, trending slightly downward since. However, new postings have held at an elevated rate.