US job growth expected to slow
According to The Conference Board’s Employment Trends Index, job growth in the US is expected to continue over the next few months, although at a slower pace. The index rose in April to 116.18, up from 115.51 in March, but the organization has forecasted a small recession to begin in 2023, although the weakening of job growth may not be noticeable until later in the year. Frank Steemers, senior economist at The Conference Board, notes that the labor market remains strong but shows visible softening across several indicators, including declines in job openings and quits, increased layoffs, and softening compensation growth.
Despite these factors, the labor market remains resilient and tighter than before the pandemic, which could complicate the Federal Reserve’s efforts to slow inflation. Steemers believes this may prompt the Fed to raise interest rates by an additional 25 basis points to decelerate job growth and wage gains. The Employment Trends Index for April was driven by positive contributions from four of its eight components, with the ratio of involuntarily part-time to all part-time workers being the largest positive contributor, followed by job openings, the percentage of firms with positions unable to fill right now, and the percentage of respondents who said they find “jobs hard to get.”
Overall, The Conference Board’s Employment Trends Index suggests that while job growth will continue in the short term, a recession may be on the horizon. However, the labor market remains strong, and the Federal Reserve may need to take steps to control inflation, which could impact job growth and wage gains in the future.