How Long Will the Labor Market Stay Consistent?
In September, the labor market continued to experience its longest period of relative consistency since the onset of the COVID-19 pandemic. That’s not to say the economy is back to normal. It remains out of balance, with approximately 1.8 job openings for every unemployed person.
Turnover and inflation also remain at or near historically high levels. Still, we’re seeing a level of consistency that we have not experienced since late 2019 and early 2020.
Analyzing UKG workforce data for September 2022, the total volume of shifts being worked during the same week the Bureau of Labor Statistics uses to measure job creation declined -0.3%. As we’ve explained in previous months, declines in shift work are not necessarily bad, and they do not necessarily translate into a loss of jobs in the economy.
The big picture
To understand September, we should consider the month in broader context.
First, we’ve now seen gradual declines in shift work volume in 6 of the last 7 months. The last large swing in shift work was in January, during the height of the omicron wave when it felt like most of the country was calling out sick from work, followed by the sharp snapback to normal in February.
Next, the changes from August to September 2022 are similar to changes we saw between these two months over the last three years. In each instance, August experienced larger shiftwork declines, while September exhibited signs of improvement as people returned from vacations and time-off.
Lastly, we are not seeing any indication of widespread layoffs among the hourly workforce.
Takeaways
While news of rightsizing and downsizing in the tech and finance sectors continue to make weekly headlines, the retail industry is making news by (cautiously) ramping up holiday hiring (although, the forthcoming annual UKG retail holiday survey finds a third—33%—of organizations will scale back hiring for the remainder of the year). UKG high frequency data also shows healthcare achieved its first month-to-month gains in shift volume since February.
Overall, UKG expects a positive, though modest, jobs report, which will likely not exceed the pre-adjusted August 2022 growth of 315,000 new jobs. While it appears as though the Federal Reserve’s continued interest hikes are indeed bringing the labor market in for the desired soft landing, the consistency we are currently experiencing may be disrupted should there be another unexpected shock to the economy.
UKG will release its full September 2022 report on Tuesday, October 4, and will discuss expectations for the BLS report during the monthly UKG Live Labor Market Briefing, taking place on October 4 at 10 a.m. ET.