There’s good news and bad news these days when it comes to the American labor market.
On the plus side, The Wall Street Journal (WSJ) said in a report Saturday (Aug. 23), unemployment is still low, with companies showing little interest in carrying out layoffs. On the other hand, employers also seem uninterested in hiring.
That means that even a relatively minor uptick in job cuts could mean greater losses, the report added, and that process can be tough to halt once it gets going.
It’s because of this fear, WSJ added, that Federal Reserve Chairman Jerome Powell has signaled a possible interest rate cut even with inflation above the central bank’s 2% target.
In a speech last week, Powell characterized the employment landscape as “curious,” with the reduced supply of workers because of immigration restrictions offsetting the effects of reduced demand, leaving unemployment relatively low as a result. All the same, Powell said the risks of a deteriorating jobs market are increasing.
“And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment,” he said.
Department of Labor data from earlier this month shows that the number of Americans who have filed a continued claim for unemployment benefits has reached its highest level in almost four years.
Unemployment beneficiaries came to 1,972,000 during the week ended Aug. 9, a figure that was 30,000 higher than the prior week and the highest since the 2,041,000 recorded on Nov. 6, 2021, the department said last week.
Meanwhile, recent data from the Conference Board shows that 20% of American employers plan to hire fewer workers this year, nearly double the rate of companies that intended to slow hiring at this point last year.
Businesses are “taking a more thoughtful, steady approach as economic and policy uncertainty lingers,” Diana Scott, leader of board’s U.S. Human Capital Center, told WSJ.
At the same time, research by PYMNTS Intelligence shows that some businesses are feeling renewed confidence in the face of economic uncertainty.
For example, surveys of micro businesses taken in February and March found that 68% of these companies were optimistic about their chances of surviving the next two years. By June, that figure had climbed to 75%.