August Labor Market Leaves Fed with Coin Flip

Welcome back to the Recruitonomics Newsletter! This week, we’re taking a look at the latest jobs report. In August, the labor market added 142,000 net new jobs, moderate gains that do not necessarily give the Fed more clarity heading into its September interest rate decision.?

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This Week on Recruitonomics:?

August Jobs Report Leaves Fed with a Coin Flip?

The labor market added 142,000 net new jobs in August, the headline number of a jobs report that may leave the Federal Reserve more contemplative than before. This is the third month of underwhelming gains, and revisions to June and July’s numbers erased 86,000 more jobs from the summer’s employment additions. But the unemployment rate dipped a percentage point to 4.2% and there is no evidence of widespread layoffs, despite businesses’ obvious reluctance to hire at this time. At its core, this is a jobs report that is neither too weak to sound alarms for the Fed, nor strong enough to suggest it's just more of the same soft landing. With an interest rate decision coming in just a couple of weeks, that leaves the Federal Reserve with a tough choice. Not whether or not to cut, that’s already been decided, but by how much to cut, either 25 or 50 basis points. This report leaves markets suspended in a coin flip, unlikely to land until the Fed’s announcement on September 18.??

Read the full article here.

What does this mean for recruiters??

At a high level, the U.S. labor market is nearly at equilibrium – where supply matches demand. Demand is approximated by employment plus job openings, which has been gradually declining for some time. Supply, which in this case means the labor force, has been on the rise – thanks to immigration, primarily. The two lines are about to intersect, meaning companies and their recruiters have much more power over the recruiting process than previous years.

Recruiting Tips:?

Watch the latest Appcast Brief, featuring Andrew Flowers and Julius Probst, PhD. Just this morning, Andrew and Julius discussed the latest jobs report, the Fed’s upcoming interest rate decision, and the general state of the U.S. economy. Check out the recording here and watch out for the October edition!?

Recently on Recruitonomics:

The U.S. labor market may have created around 800,000 fewer jobs than originally reported last year, according to new data revisions. This is obviously a very big deal, even in an economy with more than 155 million workers. From April 2023 to March 2024, the labor market was much weaker than it originally appeared, adding an average of only 174,000 net new jobs per month, compared to the originally reported 242,000 net new jobs. This is one of the largest downward revisions in recent history, following the benchmark revision for the recession year of 2009.? However, one of the main issues that plagued the original surveys may also be leading to an overestimation of downward revisions. How has the Bureau of Labor Statistics been so far off? Some economists argue that the BLS’ tools for calculating the employment numbers are less effective in the post-COVID world. But, it’s plausible that the Quarterly Census of Employment and Wages, from which the revisions are based, could be underestimating the true jobs numbers. One of the most notable labor market stories of the past couple of years has been the increase in immigration and its reshaping of the labor supply across the country. But not every immigration case is properly recorded; plenty of undocumented immigrants are working in this country too, but may be fearful of responding to surveys. The QCEW depends on data from state unemployment insurance agencies, but to be counted by those agencies, one must have a social security number. Therefore, while the labor market is certainly less strong than we previously believed, even these revisions may be off. We may not know the true pace of job creation until February when the final benchmark revision is released.?

Read the full article here.

What Recruitonomics is Reading:

Nearly unheard of just half a decade ago, remote work has gone from a pandemic necessity to a popular benefit that employers are less and less keen on. Of course, there are positions that are better suited for remote work: Serving food in a restaurant is impossible to do remotely, while creating marketing materials can be done from anywhere. Jobs that have the capacity to be remote exist in nearly every sector, but not every sector is offering remote work on the same scale. New research from Revelio Labs shows that different industries have significant differences in the likelihood of offering remote positions, with media and communications being the most remote-preferred industry and real estate being the least. Read the full analysis here.??

More Data & Insights:

? Is the Skills Gap Getting Worse in the UK??

? The Great Reallocation: Can Worker Churn Explain the Productivity Burst?

?Will Texas be the New California?

Thank you for reading! Stay tuned for next week's Recruitonomics Newsletter and check out Recruitonomics.com for more data-driven insights.