Labor market is 'rebalanced' as 'traditional' jobs pull back

US initial jobless claims fell to 235,000 last week, down 10,000 compared to the previous week. With unemployment still historically low, but the economy growing faster than expected, how does it impact the overall job market?

Indeed Hiring Lab research director Nick Bunker joins Wealth! to give insight into the state of the labor market and what both investors and workers need to know moving forward.

"It's a labor market that's rebalanced, it's moderated, and it's in a good spot right now. But any further increase in unemployment or reduction in job openings that starts to, if not necessarily trip alarm bells, should start to make folks a little uncomfortable about how much this sweet spot we're in right now could last," says Bunker.

He points out what type of jobs have seen a pullback, pointing to trends in "traditional" office jobs in recent years.

"But, now they're more remote capable jobs. They've pulled back, the last postings on Indeed for those sectors are now actually below their pre-pandemic level, so we've seen a lot of pullback in hiring there, but it's not quite recessionary yet."

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This post was written by Nicholas Jacobino

Video Transcript

Now, less Americans are filing for unemployment at least over the course of the past week here because initial jobless claims come in dropping more than expected and taking lower than the prior week here to discuss what you need to know if you're in the job market here.

We got Nick Bunker.

Indeed.

Hiring lab research director, Nick, thanks so much for being here.

So the unemployment data, at least today, I didn't really move the needle that much.

But what is the broader thesis that you think you could give our audience to sort of define where we're at with the labor market right now.

In short, the US labor market is a sweet spot right now.

The issue moving forward is that it needs to stay in this group that's in right now.

We have seen the unemployment rate drift up, but it's still at 4.1% quite low by historic levels and job openings.

And you know, indeed measure of job postings have drifted down over the last two years, but they're still well above pre panem levels and specifically to the U I claims data, we're still seeing rates of layoffs are still very low.

So in the labor market has cooled down a lot over the past two years.

In the spring of 2022 the ratio of job openings, unemployed workers close to two now it's back to 1.2.

Which is funny enough what we saw back in 2019 as well.

So it's a labor market that's rebalanced.

It's moderated and it's in a good spot right now.

But any further increase in unemployment or reduction job openings that starts to, if not necessarily trip alarm bells starts to make, uh, shouldn't start to make folks a little uncomfortable about how much this sweet spot we're in right now could last.

Well, talk to me about that piece specifically when it comes to individual sectors that could be at the most risk for our viewers listening in what types of jobs are potentially about to suffer the most frankly from this potential downturn that we could see out of the sort of goldilocks scenario that we're in right now with the labor market.

The tricky thing about that is that every recession is different or put another way, the way to understand which jobs are affected most by a downturn is to understand what actually caused the downturn.

And, you know, we're not on the cost of recession by any means.

I look at today's GDP report, but I think moving forward, there are a few culprits, the main one, you know, if there were to be a recession sometime soon would be high interest rates.

So I think that means you want to take a look at what happens to employment and say construction, um or other um interest rate sensitive sectors like manufacturing and what we've seen from the data recently, particularly when it comes to construction is that, you know, there's still healthy job gains there.

Um It's not rip roaring by any means, but things are holding pretty steady.

What has been interesting over the last two years is that the sectors that have really pulled back on hiring the most, a lot of traditional, what we would call, used to call office jobs, but now they're more, you know, remote capable jobs, they've pulled back over the last, um, you know, posting on indeed for those sectors are now actually below their pre pandemic level.

Um So we've seen a lot of pullback and hiring there.

Um But it's not quite recessionary yet.

Talk to me about that from the perspective of job seekers because at least anecdotally the people I know who have unfortunately experienced layoffs over the past year or so, they're really struggling to find work.

And this is a swift change from what we saw during the labor shortage following the pandemic.

So talk to me about what that looks like and how long that could potentially last.

So we are seeing that hiring rates across the boards across the world are, are slowing down, you know, look at the government data, uh We've got, you know, hiring rates close to what we saw in say 2017, 2018 when the unemployment rate, um, was, you know, low but not uh the historical levels that we saw um, early in 2022.

I do think the speed at which you find a job right now, if you've been thrown out of work does depend on the sector.

If you are someone who has been laid off in say tech or media, it's going to take longer than it used to.

And in some cases much longer than it used to where there are some other sectors where demand is still robust right now and your period out of uh work might not be that long.

You know, if you look at the overall data, the median duration of unemployment from the Bureau of Labor Statistics, it's basically what we saw back in 2019 just before COVID hit.

So there are certainly some pockets of labor market right now where finding a job is taking longer than usual.

Um But that's not at least at this point, a broad based economy, wide phenomenon.