Slowly, Slowly, Catchee Monkey
We had a slew of US labour market data this week (Payrolls, Jolts, Weekly Claims, Challenger Job Cuts, ADP and Indeed job postings. They confirm that the labour demand is robust, and the labour market is (very) tight by historic standards. They also told us that labour market supply is improving, (the young are coming back to work in larger numbers) and that wage growth continues to subside, even in leisure and hospitality, where the competition for workers has been fierce but companies are suddenly finding it a lot easier to hire the workers they need. Perhaps the Fed could afford to be more patient.
The Civilian Labour Force is now above where it was before the pandemic and is closing the gap on the projected civilian labour force had the labour force participation rate stayed the same since January 2020. (Figure 1)
Likewise, the labour force participation rate has reaccelerated in the months since November, although it is still 0.25% below a normal pre-pandemic level (Figure 2). Notable gains have been made in the younger cohort of 20-24 year old's, which is positive news for consumer-facing service sector inflation. Meanwhile, the core (25-55 year old's) labour force participation rate is now back to pre-pandemic levels, while those who retired early in the 55+ bracket have not been enticed back. (Figure 3).
While the overall level of employment has had strong gains in the past few months, forward-looking data suggest that demand for labour at the margins is showing signs of deceleration.
The Indeed Job Openings Index has fallen around 6% since the end of January, and indicates a fall in the official February Job Openings figure (Figure 4).
The number of Job Openings competing for each unemployed person, a labour market 'tighness' index sometimes quoted by Powell showed an improvement in February, but overall the remains very tight. (Figure 5)
Nominal Wage gains have showed early signs of a slow down on a Quarterly basis. If this continues we should see year on year rates resuming its downward trajectory. (Figure 6)
The February ADP wage data for Job Switchers vs Job Stayers highlights the slight easing in competition for workers between firms. (Figure 7).
It seems that the supply of labour has picked up, while demand of labour remains robust.