US Labor Market Tracker – Weak hiring, fewer job seekers bring balance
The labor market shows signs of strain with weak hiring and fewer job seekers, while wage growth slows amidst changing workforce dynamics. Discover more insights.
The U.S. labor market remains broadly balanced but has tightened slightly in recent months as labor supply has weakened more than demand. Hiring remains subdued, but slower labor-force growth means the economy requires fewer new jobs to keep unemployment stable.
Labor force participation has fallen across several age groups, reaching 61.4% in July. Oxford Economics expects some of this decline to reverse. Increased school enrollment has reduced participation among younger workers, while retirement and population aging have lowered participation among older workers. Recent declines among some prime-age workers appear more likely to reflect temporary volatility in the household survey than a lasting deterioration, although they remain a downside risk to the outlook.
Recent payroll weakness may also overstate the underlying slowdown. July’s decline was heavily influenced by a 50,000-job drop in state and local government employment, concentrated in education, which Oxford Economics believes was partly caused by seasonal-adjustment issues. Private payroll growth has slowed but remains roughly consistent with the pace needed to keep unemployment stable.
Despite the contraction in labor supply, wage pressures are continuing to ease. Wage growth near 3%, combined with productivity growth above 2%, suggests the labor market is not generating significant additional inflation pressure and remains consistent with further easing in core inflation.
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