Jobs
Job market is slowing, but not ‘collapsing’: Economist
The US S&P Global Composite Purchasing Managers Index (PMI) for May grew to 54.4, its highest level in two years. Although manufacturing growth continues, the labor market has seen some pullbacks in hiring.
S&P Global Market Intelligence Chief Business Economist Chris Williamson joins Catalysts to discuss the state of the labor market and its connection to ongoing inflation issues.
“It certainly looks like the service sector hiring trend is cooling quite markedly. However, it is being supplemented by an upturn in manufacturing. We know there’s a lot of investment going on in manufacturing at the moment, expanding capacity…and so we’re seeing this more balanced economy coming through where growth is slowing, perhaps in the service sector according to the jobs market, but starting to pick up in manufacturing…So it leaves this overall picture of a slowing job market, but not a collapsing one,” Williamson tells Yahoo Finance.
For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Nicholas Jacobino
Video Transcript
Well, Chris, let’s talk about the labour market here.
We know that Atlanta Fed officials this week at their conference we’re talking about how CEO S are telling them that they are pulling back on hiring.
At what point does that indicate a broader risk to this market that could stall some of the growth that we’re seeing keeping fears about the economy at bay?
Yeah, so we we’ve had two months now of of falling employment that’s been led by the service sector.
It certainly looks like the service sector hiring trend is cooling quite markedly.
However, it is being supplemented by an upturn in manufacturing.
We know there’s a lot of investment going on in manufacturing at the moment, uh, expanding capacity, the Chips Act and the IRA.
They’re helping to expand that manufacturing base.
And and we’re So we’re seeing this more back economy coming through where growth is slowing, perhaps in the service sector, according to the jobs market.
Uh, but starting to pick up in manufacturing, which leaves this overall, I mean, manufacturing is still a small part, so it leaves this overall picture of a of A of a slowing job market, but not a collapsing one.
So I, I think that leads to a suggestion that you’re going to see some some weaker pay pressures come through, which is going to help the the overall inflation picture.
But at the same time that weaker job market, weaker pay growth is a negative for consumer spending.
So it’s gonna be interesting to see how this plays out.
But what I think the important takeaway here is that at the moment we still have this above trend inflation rate.
That’s gonna be front of mind.
And even if the labour market is slowing, those wage pressures remain elevated by pre panem standards.
To the extent that, uh, it’s causing some nervousness, Certainly.
And that’s why we continue to say, we just need the Goldilocks perfect amount of heat and coldness in all environments here.
Chris, thank you so much for joining us and sticking with us through those tech issues.
We appreciate it.
That was Chris Williamson.
He is S and P, Global’s Market Intelligence chief business economist