The U.S. labor market remains extremely tight, but we may be seeing a very early sign that it is starting to find its level.
According to the UKG Workforce Activity Report for August 2022, the market has now experienced a gradual slowing over the last six months. This is welcome news as the Federal Reserve continues to attempt to bring the market back into balance. It’s safe to say we’re now sitting in a Goldilocks jobs market, with changes taking place at a rate that is not too slow, not too fast, but just right.
There are still more than 11 million job openings that businesses are trying to fill, as of the July Bureau of Labor Statistics Job Openings and Labor Turnover Survey. Assuming there are no big shocks to the market, the ongoing gradual slowdown in workforce activity will help bring the number of workers and the number of job openings back into more normal alignment.
The UKG high frequency data for August showed workforce activity declined -0.8%, just a slight change from the -0.6% decline experienced in July. August 2022 presents a sharp contrast to August 2021 as well when workforce activity declined -2.4%. This indicates more people are working now compared to last year, and fewer people are taking time off, though not to the degree that it would exacerbate the current concerns around people becoming burned out.
Here’s a look at additional highlights from August:
- Healthcare showed signs of improvement considering the continued declines that the industry has experienced over the last two years, posting flat growth.
- The retail, food service, and hospitality sectors, buoyed by summer demand, also remained flat.
- Although manufacturing (-1.1%) and service and distribution (-1.6%) posted larger declines, neither are large enough to be considered significant or concerning.
Because the UKG data is available week-by-week, we’re already analyzing data for the second half of August and early September. It appears the sought-after soft landing for the labor market continues, with gradual declines continuing over the last two weeks of August (-0.6% and -0.4% respectively). The week before Labor Day also performed as expected, showing similar declines experienced in 2019 and 2021.
UKG will publish its September Workforce Activity Report on Tuesday, October 4. For a first look at analysis, register to attend the next UKG Labor Market Briefing, taking place October 4 at 10 a.m. ET.