What can we say about the current economic and employment outlook that doesn’t cause more confusion? Hiring is hot (but it’s cooling off). Unemployment is low (but it fluctuates depending on industry and demographics). High-profile layoffs abound (but the national layoff rate is near a historic low). The economy is headed for a soft landing (but, of course, no one knows for sure). We’ve found that the best way to approach these contradictions is with caution … as well as with a healthy sense of optimism.
Why this confidence, you might ask? A labor market that can remain solid while also staying within projections is a positive sign that things are moving in the right direction, easing recession fears by bringing down the inflation caused by wage wars and higher consumer prices. We’re seeing the effects of some much-needed stability after several years of upheaval brought about by a global pandemic. Since 2020, we’ve dealt with the dual challenges of rebuilding our economy and rethinking the very notion of how we view work in our next normal.
So, what can organizations and hiring professionals glean from the first quarter of jobs reports in 2023? The key takeaway: After a monumental January jobs report, the data began to level off in February and March … and that’s decidedly a good thing.
A Look Back at the Last Three Months of Jobs Data
The aforementioned January jobs report startled economists by revealing a gain of 517,000 jobs, crushing the market estimate of 187,000. While encouraging news for job seekers and an undoubtedly positive development for a rebounding economy, a continuously red-hot labor market keeps the people at the Federal Reserve up at night (and their response is often to raise interest rates to try to bring things back into balance).
February and March’s reports have since demonstrated that desired hiring drop off, with job creation more in line with economists’ expectations (311,000 and 236,000 jobs added per month, respectively). The labor force participation rate (the number of available workers actively employed or seeking a job) increased to pre-pandemic levels. And, job openings also fell to their lowest levels since May 2021.
Why is this all considered good news? As people look to restore their pre-pandemic lifestyles, returning to work, travel, and leisure activities, the economic outlook is brightened, the markets stabilize, consumer confidence is bolstered, and companies can continue to hire to keep up with demand.
From the perspective of the Federal Reserve, which is seeking enhanced job seeker participation, better alignment between open positions and available workers, and tempered levels of wage growth to slow down the inflation brought about by the rapid reopening of the global economy, more stability potentially means a softer landing.
Which Industries Benefit Most?
Throughout Q1, employment continued to trend up in leisure and hospitality, government, professional and business services, and healthcare. These supersectors continue to grow as the demand for goods and services advances despite a cooling economy.
In addition, as supply chain issues get ironed out, the manufacturing, production, and shipping sectors are soaring, not only in the U.S., but worldwide. And as the role of technology transforms our workplaces, including the rise of artificial intelligence and other forms of automation, jobs in those fields are also highly competitive.
Finally, while not a specific industry, big corporations with more than 5,000 employees are likely to experience job growth because they have the money and the manpower to weather economic swings, as well as the time-tested strategies for keeping people employed.
Where Do We Go From Here?
Over the past 12 months, the labor market has seen a net gain of more than 4.1 million jobs, averaging 345,417 jobs gained per month, with 2022 going down in history as the second-best year for job development on record (the first is 2021, demonstrating the lasting impact the pandemic has had on employment).
Many experts are now reframing the current economic situation as an effort to restore our equilibrium after years of uncertainty surrounding the pandemic rather than a full-blown recession, especially as inflation eased in March.
The best course of action for these ever-changing economic times is, of course, to build your organization’s most resilient team. Partnering with a proactive executive search firm ensures your company’s long-term success, especially one that boasts advanced technological resources, the industry’s deepest databases, a proprietary comprehensive process, and an expert team of recruitment professionals ready to take your business into the future, whatever it may hold.