Why it may not be time to job hop: Economist

ADP released its latest private sector jobs data, showing only 150,000 positions were added in June, below an expected 165,000. This marks the third straight month of slowing job creation. What does this mean for the labor market moving forward?

ADP chief economist Nela Richardson joins Wealth! to give insight into the latest ADP jobs data and what investors and American workers should keep in mind.

For workers who are looking for new jobs, Richardson warns, “This is not a hot sector market. It’s a cooling market. So the first thing to note is that it may take a little longer to find that next job than it would have taken a year ago. People are staying in their jobs longer. We saw that in the JOLTS data. The job openings, hiring and quits data that came out from the BLS earlier this week. Quits rates are about the same pace they were before the pandemic. So this is not a place where people are leaving jobs and there’s a lot of job openings that come to fruition.”

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

Private employers in the US added fewer jobs than expected in June 100 50,000 according to AD P that is the third straight month of slowing job creation.

Joining me now to break down the data, we’ve got Nela Richardson who is the AD P chief economist.

Great to see you.

And as always, thanks so much for taking some of your time after this fresh data drops.

I wanna get your read in on exactly what we’re seeing in some of the moderation in key sectors.

I remem remember looking through this report earlier this morning and you essentially said in a nutshell, had it not been for leisure and hospitality, we might have seen a, seen a much different report.

That’s correct, Brad.

And it’s great to be with you.

This is the third straight month of job declines, uh uh declines in job gains, I should say.

So we’ve seen this gradual cool down uh all year, but particularly over the last three months, 100 and 50,000 jobs is solid, but it’s not broad-based.

It’s really coming from a couple of sectors on the services side and leisure and hospitality.

As we noted, in the press release is responsible for the bulk of the gains.

It was 42% of the hiring this month.

So the question before us is, can the labor market continue with this gradual pull down when there’s just one or two sectors really driving the gains every month?

What is that signal to you about wages right now?

Well, we don’t need the signal.

We actually have the paycheck.

Story continues

So at A P over 10 million workers every month for this report anonymized, but individual to individual matches.

And this is the first time since August of 2021 where job gains for job stays have broke below 5%.

That is significant.

Yes, it’s a significant like milestone in our trajectory back to a wage growth that is consistent with 2% inflation, but it’s still ev from, from pre panic levels and the declines in job growth are slowing.

So we’re not seeing big jumps downward.

We’re seeing an edging down in a very slow and gradual way with these annual job gains.

What about for job hoppers?

On the other side?

Those who are looking across some of these listings online and saying, you know what?

I think I fit the bill.

I fit the prerequisites to be able to throw my hat in the ring and I’m looking for a little bit of a pay bump too and they’ll get it in this market.

We were still seeing a pretty elevated pace of pay bumps for people who change jobs within the last year, about 77.7% annual growth for job changers.

But there has been some shifts notably in that very leisure and hospitality sector that’s driving a lot of the gains this month.

We’re seeing that you don’t get the same pay bump you did uh a couple of years ago.

In fact, leisure and hospitality is the one sector when we look at job switchers where you actually lose money from changing jobs.

So that is a key difference in terms of how the sector stacked up in the month of June.

Additionally, we gotta give people some actionable tips here, say that they are looking for a job right now and trying to make sure that in whatever capacity that they’re seeing hiring or even some pull back in the number of jobs that are open here, where can they make sure that they’re kind of deploying their best efforts?

Where are some of the hot sectors?

Uh This is not a hot sector uh market, it’s a cooling market.

So the first thing to, to note is that it may take a little longer to find that next job than it did would have taken a year ago.

People are staying in their jobs longer.

We saw that in the jolts data, the job openings, hiring and quits data that came out from the BLS earlier uh this week.

Uh quits rates are about the same case, they were before the pandemic.

So this is not a place, people are leaving jobs and there’s a lot of job openings that come to fruition.

It also means that there are some segments of the economy that are slower than others.

So if you look at the good sector, manufacturing, construction, natural resources, it’s slower than services.

So if you want to a quick job, um I would head to customer facing jobs and healthcare and leisure hospitality.

But if you want a high paying job, you might have to wait a little longer for that manufacturing job or that construction job perhaps in professional business services.

So, um patience is the key for the fed and now patience is the key for people who are looking for a new job.

All right, patience in the job search type summer, Nela Richardson.

Thanks so much for taking some time here with us today.

A lot to really wrap our minds around over the course of this week with some of the employment data readings such as that from AD P AD P, chief economist Neil Richardson.

Great to see you.

Thank you.

Good to be here.