The economy added a solid 261,000 jobs in October, well-above economists’ expectations of 190,000. The labor market keeps rolling despite the general sentiment and overall uncertainty. This does not look like a labor market entering a recession.
While things have cooled from big gains earlier this year, October’s net job gains are still above the pre-pandemic average of 200,000 jobs added per month. With unemployment rates just above pre-pandemic lows and nearly two job openings for every unemployed person, U.S. businesses need to focus on retaining talent.
October's job gains bring the total for 2022 to just over 4 million, an average of 407,000 jobs added per month – more than double the pre-pandemic average job gains.
Despite more moderate job gains in October and expectations of a slowdown or recession, hiring remains strong compared to historic levels. The labor market is still tight, and while showing some signs of softening, the competition for talent is still fierce.
Job openings are a key indicator of labor demand. And September’s job openings reported earlier this week, showed an unexpected jump by over 400,000 to 10.7 million, still well-above pre-pandemic levels.
And while there have been many high-profile layoffs, the volume ticked down month-over-month and remain near historic lows at 1.3 million per month (compared to around 1.9 million monthly layoffs before the pandemic). There have only been three months with lower layoffs than September since data collection began in December 2000.
Layoffs and unemployment may be near historic lows, but the unemployment rate ticked up to 3.7% in October due to a 306,000 increase in the number of unemployed people.
When workers do lose their jobs, there’s been enough demand out there that they aren’t staying unemployed for long. With 10.7 million job openings but only around 6 million unemployed workers available to fill those open roles, there are nearly two open jobs for each unemployed worker.
As demand for workers starts to moderate, we’d expect record wage growth to ease. October’s jobs report shows 12-month wage growth hitting 4.7%, down from 5% in September. Wage growth does remain elevated from a historic perspective, but this is the lowest level since December 2021, signaling some relief for employers looking for talent in today’s market. After hovering near 5% since 2022, LaborIQ® forecasts that wage growth will moderate substantially in 2023, with annual growth below 2.5%.
Despite Challenges, 2022 will Close out as an Historic Year for Hiring
While there are broader economic challenges and uncertainty abroad, hiring is likely to slow in the final quarter of the year, but 2022 will still close out one of the strongest years for hiring in history. For 2022, LaborIQ® projects we will close out the year averaging over 300,000 jobs added per month, with an annual total near 4.5 million. Projections show 2023 looking like a more “normal” year with the potential for a deeper slowdown or recession. LaborIQ® forecast scenarios for 2023 range from around 600,000 jobs lost to 1.2 million net job gains.