NW Recruiting Partners: August Jobs Market Update
We are seeing more stability in the economy as fall approaches. With 2023 now beyond the halfway mark, we can reflect on what we’ve seen in the past few months and anticipate where we’re headed for the remainder of the year.
Optimism Grows as Recession Fears Decrease
Throughout 2023, concerns have persisted that a recession might be on the horizon, driven largely by rapid inflation, a hot jobs market, and rising interest rates. Now, however, many economic experts have somewhat of a rosier outlook. Among one survey of economists, 71% say that the probability of a recession is 50% or less over the next 12 months. Lowered inflation and less panic over a potential recession will also likely affect hiring and consumer decisions. Experts are projecting a more balanced job market: While employees may not be inclined to hold onto unsatisfying jobs as they might during an impending recession, it is also unlikely that they will depart at the same levels witnessed during the peak of the Great Resignation.
Wages and Employment Stabilize Across Sectors
One of the ripple effects of the hot jobs market has been fast-rising wages – an attempt to remain competitive and continue to attract talent in a candidate-driven market. Now, things seem to be calming down. One survey cites that 53% of economists found wages were unchanged in the second quarter of 2023, marking the first time for this since 2021. 67% of the surveyed economists expect national employment numbers to remain unchanged in the next three months.
Meanwhile, the latest Job Opening and Labor Turnover Survey, or JOLTS report, noted 8.8 million jobs open at the end of July, down from 9.16 million jobs open a month earlier. The quits rate also fell to 2.3%, the lowest quit rate since January 2021. This indicates a slight cooldown in the race for talent, as well as more confidence from workers and a desire for stability over rapid job changes.
According to the latest U.S. jobs report, total employment continues to rise, but at a slower rate – another indicator of the “soft landing” exit route to avoiding a recession. For employers, this should mean fewer hiring woes; for employees, this may mean slightly more competition. The likeliest scenario, however, is a more balanced company/candidate relationship, where candidates won’t give up their hard-won benefits over the last few years but may be more willing to consider being flexible and meeting the business somewhere in the middle.
Job Postings Increase for Key Industries
In July, online job board postings across all industries ticked up by about 0.3%, although it is still down year-over-year by 6.8%. It’s another indicator that, while the most challenging times may be behind us, the job market continues to witness an increase in job openings, accompanied by robust competition for talent, particularly in sectors beyond the tech industry.
One industry in particular that is feeling the pressure is construction. As of late July, the construction industry in the U.S. is reporting a shortage of as many as 650,000 workers, causing serious delays in projects across the country. The pressures come from various directions, including an aging or shorter-career labor force due to the work’s dangers and sheer physical toll. Like other industries facing significant shortages, construction is working to build a better pipeline. This includes strategies such as partnerships with schools and colleges, incentivizing industry veterans to stay on and train the next generation, and forming apprenticeships that target demographics (such as women) traditionally underrepresented in the field.
The Outlook This Month
As the summer draws to a close, we’re seeing some relief from the most significant stresses of recent months. So far, the economy seems to be threading the needle to support continued growth while avoiding the worst-case recession scenarios. As a result, the job market may be able to find its own sweet spot, but recruiting, wages, and retention remain challenging in some key sectors. A sense of cautious optimism may be the best approach as we head into the final months of the year.