US Labor market tracker shows risks will bring forward a rate cut

Our tracker shows that labor market conditions have loosened on balance over the last three months. The labor market can still be described as roughly in balance, but the downside risks have intensified and will lead to the Federal Reserve cutting interest rates at its next policy meeting.

• The variables in our tracker that deteriorated over the last three months reflect the ongoing theme of a no-hire, no-fire labor market.
• The hiring rate is depressed and unemployed individuals and new entrants into the labor force are finding it tough to find jobs.
• The unemployment rate has been relatively stable because layoffs are low.
• Slower labor force growth will also hold down the unemployment rate, masking some of the potential fissures in the labor market.