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Job Growth, Openings, and Employment Costs Cool Off

Employers added 253,000 payroll jobs in April, well below the 295,000 average over the previous three months, and job openings fell to their lowest level in two years.

Minority unemployment rates at or near record lows. Hispanic unemployment rate was 4.4%, and the Black unemployment rate hit a record low of 4.7% in April.

But looking at the details matters. Unfortunately, the low Black unemployment rate stems from a large drop in the labor force and employment for black men aged 20+ and black teens (a combined -334,000 and -322,000 respectively).  The unemployment rate for black women also rose from 4.2% to 4.4%.

Biggest gains in six industries: Professional and Business Services (+43,000), Health Care (+39,600), Bars/Restaurants (+24,800), Social Assistance (+24,600), Financial Services (+23,000), and Local Government (+17,000). There was very little job growth in all other major industry groups.

Employment service jobs fell for the fifth time in the last six months, indicating a slowing job market.

Employment costs cool off. The employment cost index for private sector compensation slowed to an annual increase of 4.8% in the first quarter, steadily down from 5.5% in the second quarter of 2022.

Outlook: While hiring is slowing, layoffs are not  gaining steam and employment costs are moderating. When adjusted for inflation, employment costs have been  falling for the past two years. Job gains could slow further as higher interest rates and tighter credit standards move the economy into a “growth recession” with some industries contracting while others continue to recover from the pandemic.

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Authors: D. Mark Wilson

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