🇺🇸 The US jobs report appears stable on the surface, but there are quite a few warning signs underneath. Just looking at the monthly US jobs report is enough to understand the situation better than a thousand explanations... the current situation lacks stability.
While the US economy added 115,000 jobs in April, higher than forecasts, this is still a significant decrease from the 185,000 in March. This indicates a noticeable slowdown in hiring momentum, and these figures may be subject to downward revisions. Companies are still hiring, but at a much slower pace than before.
Wage growth is also slowing. Hourly earnings are rising less than expected, which may help the Fed ease inflationary pressure, but also reflects businesses becoming more cautious and workers beginning to lose their bargaining power.
Another notable point is that the labor force participation rate continues to decline to its lowest level since 2021. The unemployment rate, at 4.3%, sounds stable, but this is partly due to fewer people actively seeking employment. If someone stops looking, they are no longer counted as unemployed, which can make the data look better than it actually is.
One of the most worrying signals in this report is the increase of 445,000 people working part-time because they cannot find full-time jobs. This is often a sign that businesses are under economic pressure and are choosing to cut working hours rather than mass layoffs.
Meanwhile, the technology and information sector continues to weaken as the trend of AI automation and a "less hiring, less laying off" environment persists. Companies are now not aggressively laying off employees, but they are also no longer aggressively hiring.
Currently, the Fed is choosing to temporarily ignore these signs of weakness due to concerns about a return of inflation. However, if the weakening trend in the labor market continues for several more months, it will be very difficult for the Fed to maintain this stance.
This is also why Fed Chairman Jerome Powell maintained a dovish tone in recent meetings, even though the Fed is not in a hurry to cut interest rates right now.
The current situation is not yet a collapse, but it cannot be called healthy or strong either. It resembles an economy gradually losing momentum while trying to avoid recession.
