May US Jobs Report Preview

• Consensus estimates project nonfarm payroll employment to have increased by +240K in April, up from expectations of 200K in prior months and down from March’s solid +303K gain. LinkedIn data suggests stronger payroll growth than consensus on the back of a steady recovery in job transitions alongside fewer layoffs heading into April. Unemployment is expected to remain at 3.8%.
• US indicators suggest that the labor market remains steady. Hiring, quits, openings, and claims have showed little change thus far in 2024, leading in solid employment growth and unemployment below 4%.
• With no signs of reacceleration and retreating concerns about household survey weakness, the labor market remains poised to continue along a path of moderate-to-strong expansion.

Amidst slower growth reads and hotter-than-expectation inflation reports, the labor market continues to post steady figures around hiring, separations, unemployment, and employment growth. Revisions around expectations for rate cuts may temper the labor market further as the year goes on, but we see no read flags for now.

Consensus estimates project a nonfarm payroll increase of around +240K this coming Friday, slowing from March’s above consensus increase of +303K. LinkedIn data suggests above consensus payroll growth on the back of a steady rise in job transitions so far this spring alongside fewer layoffs heading into April.

These projections point to employment growth continuing at a solid clip with the 3-month average of employment growth roughly fluctuating between 200K and 300K since October 2022. They also indicate that the moderation in employment growth from Summer 2023 has not taken hold in 2024.

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Beyond topline employment growth, the composition of employment growth looks to have stabilized after some worrying months in the latter half of 2023. From June to November, employment growth primarily came from Government (countercyclical), Healthcare and Social Assistance (structural growth from population aging), and Leisure and Hospitality (pandemic recovery) with employment declining in all other sectors in October. Employment growth reaccelerated in Leisure and Hospitality after a dip January. This sector along with Government and Healthcare continue accounting for upwards of 3 in 5 job gains in 2024. Broader employment growth provides a greater buffer against net job losses (a worst-case scenario), so monitoring the sector-level data remains important.

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The unemployment rate is expected to remain at 3.8%. Claims data continues to signal stability in joblessness, having leveled out for both initial and continued claims.

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Employment in the BLS’ household survey ended its weak stretch last month, showing rising employment in 2024. Prior to last month’s report, the household survey looked weak both in overall and in terms of full-time and part-time employment dynamics. Up to March, the decline in household survey employment had been driven primarily by declines in full time employment. Weakness in full-time work along with low layoffs suggests that employers are more heavily leveraging the intensive margins (i.e., hours worked) rather the extensive margins (i.e., number of workers) to manage labor costs in recent months. An aggregate slowdown in hours worked remains a key component in rising aggregate productivity (output divided by hours worked) as measured by the BLS.

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Labor force participation for workers aged 25 to 54 looks flat after peaking at historical highs last year. Slowdown in the labor force growth remains an area of concerns due to recent strong readings for wage growth. However, evidence remains mixed as to whether wage growth is no longer moderating.

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Today’s Job Openings and Labor Turnover Survey (JOLTS) and ADP’s National Employment Report as well as LinkedIn’s March hiring data suggest that the overall labor market remains and possibly stronger than consensus expectations suggest.

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• This week’s JOLTS report showed little change from last month as expected based on LinkedIn’s Economic Graph. The overall hiring, quit, and layoffs rates saw a slight tick downward but still sit around or slightly below their pre-pandemic levels.? Arts, entertainment, and recreation again saw the most notable shifts from February to March with both hiring and layoffs reverting after a pick up.

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• ADP’s private sector employment and earnings data again showed the strongest growth in the Leisure and Hospitality sector, alleviating concerns that this sector has run out of runway in its pandemic recovery. Only the tech-heavy Information sector had job losses. ADP earnings data still shows a meaningful acceleration in wage growth for job changers, albeit slowed from last month’s jump. This deceleration suggests that we are not yet at a turning point in wage growth deceleration, but it remains an area of concern.

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• Based on LinkedIn’s National Hiring Rate , the seasonally adjusted pace of hiring changed little from February to March (-2.1%), similar to this week’s JOLTS hiring rate. Hiring in the Technology, Information, and Media industry remains well below its peak but has stabilized. This industry now has the second smallest year-over-year decline compared to March 2023 (-3.8%), second only to Construction (-1.5%). For more LinkedIn data insights, be sure to look out our forthcoming May US Workforce Report.

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