Job growth slows unexpectedly as employers cut wages and freeze hiring

City says 7,000 summer jobs are available for Boston youth ages 14 to 18

Updated April 5, 2023, 2:30 PM EST

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Just a day after job openings fell to the lowest level in nearly two years, payroll processor ADP reported that private sector employers added fewer jobs than expected in the past month as they also began to scale back pay increases – adding to fears that the economy may He faces a worse recession than he feared, as the Federal Reserve works to calm stubbornly high inflation.

key facts

Private employment increased by 145,000 jobs from February to March as industries such as finance, professional services and manufacturing lost tens of thousands of jobs each — far fewer than the 261,000 new jobs economists had projected, according to ADP’s National Employment Report. released Wednesday.

The latest data is “one of several signs that the economy is slowing,” says Neela Richardson, chief economist at ADP, noting that wage growth has begun to ease after being flat for three months as employers undo a year of strong hiring.

The ADP report comes a day after the Labor Department reported that the number of job openings in January fell below 10 million for the first time since June 2024 — down by 632,000 on a monthly basis and down from a record low of about 12 million a year ago.

In another sign of cooling, job growth last month skewed to lower-wage industries like entertainment and hospitality as well as smaller firms, while hiring at large companies was roughly flat, notes Bill Adams, chief economist at Comerica Bank.

“The economy is not doing well, and it could get worse before it gets better,” says Gregory Daco, chief economist at EY, noting that hiring efforts have contracted “significantly across many sectors” in reference to monthly job growth – as scheduled from Before the Labor Department on Friday – it could drop to its lowest level since December 2020.

What to watch

The Labor Department releases its monthly jobs report for March on Friday. On average, economists expect the labor market added about 238,000 jobs last month after a better-than-expected 311,000 new jobs were created in February. However, recent signs of softness could cloud these predictions. Comerica expects the economy added about 200,000 jobs in March, while the unemployment rate rose to 3.7% from 3.6% in February and a 54-year low of 3.4% in January.

main background

Amidst waves of layoffs continuing to hit some of the nation’s largest employers, the unemployment rate unexpectedly rose in February despite the labor market adding many more jobs than expected. “It is no longer accurate to say without reservation that the labor market is a bright spot in the economy,” Glassdoor chief economist Aaron Terrazas said after the latest jobs report, noting that recently announced waves of layoffs could ultimately paint a bleak picture of the employment path. market.

the shadow

Although they have rebounded from recent lows in a bear market, stocks have struggled this week as investors fear that recent labor market data may indicate the Fed may not be able to curb inflation without tipping the economy into recession. Consumer prices rose 6% year-over-year in February, according to the Labor Department data— down from a 40-year high of 9.1% in June but still well above the Fed’s historic inflation target of 2%. Meanwhile, the central bank has already raised interest rates to a 15-year high, prompting a housing market correction, a stock market downturn and, just last month, a host of high-profile bank failures.

Further reading

Unemployment claims unexpectedly rise to 2023 (Forbes)

2023 Layoff Tracker: Wal-Mart cuts 2,000 workers (Forbes)

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