Selective industries experience cooling job market
The Employment Trends Index, published by The Conference Board, experienced a slight decline in May, with a reading of 116.15 compared to an upwardly revised reading of 116.79 in April. This decline is primarily observed in specific industries, particularly the information sector.
Selcuk Eren, a senior economist at The Conference Board, commented on the situation, stating, “The Employment Trends Index showed a slight decrease in May, continuing its gradual decline since reaching its peak in March 2022. Despite this, the index remains at a relatively high level, indicating that job gains are expected to persist in the coming months, albeit at a slower pace.”
Eren highlighted that job losses are concentrated within a few sectors, while other industries are still struggling with labor shortages and continue to create employment opportunities. He further emphasized, “Overall, we are still facing a tight labor market, especially when compared to pre-pandemic conditions. Job growth is happening across the economy, with in-person service sectors leading the way. Industries such as leisure and hospitality, as well as the government sector, which are yet to fully recover from the pandemic, are projected to continue adding jobs. Additionally, the healthcare and social assistance industry will experience sustained employment growth due to the aging US population.”
Although the labor market cooling is currently limited to select industries, notably the information sector encompassing tech companies, Eren mentioned that weaknesses are emerging in other labor indicators. These include a decline in voluntary resignations and a surge in layoff announcements during the first five months of 2023.
The Conference Board anticipates that the Federal Reserve will increase interest rates by 25 basis points at least once to curb wage growth and alleviate inflationary pressures.
The decline in the Employment Trends Index for May can be attributed to negative contributions from five out of its eight components, namely the percentage of respondents reporting difficulty in finding jobs, real manufacturing and trade sales, the percentage of firms unable to fill positions currently, job openings, and industrial production.