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Job Numbers Suggest Economic Cool Down or Just a Sign of the Season

Business executives walking up an ominous flight of stairs.
October labor numbers imply that more chairs are filled and staying that way, indicating that hiring is slowing and employees are staying put, says Brian Miller, CEO of Patrice & Associates Staffing & Recruiting.

This month's job report could be tied to a desired economic cool down or just a sign of the season. For months now, the Fed has been steadily raising interest rates to lever down inflation and ease the economy into a soft landing rather than a full recession.

CCG: A job report cool down. The first in months. What do you make of it?

Miller: The job market has cooled off some; however, let's not mix that up with a decline. It remains remarkably resilient, just not quite as hot. We are still in a hiring mode, not in a downsizing cycle. We’re still adding jobs, albeit not at the immediate post-pandemic pace.

CCG: Can you share the numbers?

Miller: According to the Bureau of Labor Statistics, total non-farm payroll employment increased by 150,000 in October, and the unemployment rate changed little to 3.9 percent. The sectors that saw the biggest job gains were health care, government, and social assistance. Employment actually declined in manufacturing due to strike activity in the automotive sector.

CCG: How about in hospitality and leisure, both are areas of focus for Patrice & Associates?

Miller: In October, employment in leisure and hospitality didn't change much, adding only 19,000 jobs. Compare that with the average of 52,000 jobs per month over the prior 12 months. That record pace of adding jobs has slowed. Some say it's the economy, but it may be seasonality. Hiring typically eases somewhat this time of year when restaurants have already staffed up in preparation for the holidays.

CCG: Does this cool down mean more people are unemployed and looking for work?

Miller: Unemployment claims did increase a bit, but many economists are not alarmed. Again, it is likely seasonally adjusted claims, which happened about the same time last year. The labor market still remains tight, with 1.5 job openings for every unemployed person.

CCG: It's still a tight labor market despite everything the Fed is doing to slow the economy. Does that surprise you?

Miller: Not at all because, just as our franchise owners continue to tell their clients, the declining fertility rate and the aging of American workers is a long-term reality. It's not going to be fixed for decades if then. To me, a tighter labor market is likely to remain in focus for some time. Of course, peaks and valleys in the economy occur, but the demographic trends are clear.

CCG: So, employers are still in hiring mode?

Miller: Yes, companies are still hiring; however, and this is good news for Patrice & Associates because they are being extremely selective and more cautious about who they bring on their roster. Employers are only offering jobs to people who truly meet or exceed their expected qualifications and within reasonable salary guidelines. Often, that means they need recruiting assistance, and we're ready.

CCG: What about trends for candidates?

Miller: Candidates applying for jobs appear to be more cautious than they were in previous months. More applicants are accepting counter offers from their employers, meaning they are attempting to stay put. ,The reality, however, is that 80% of the people who accept those counter offers leave the company within 6 months. Companies are also hanging onto people longer because they fear the difficult work of finding the right candidate and the right fit again. Thus, the rise in counter offers seems to be a trend.

CCG: That 80% number is surprising. But as you have said many times, the best candidates are employed and actively recruited for new opportunities.

Miller: It's true. We often find our best candidates by reaching out directly to people on the job. Companies are hanging onto their employees longer, too, because they don’t want to let people go for fear of having to go through the often painful cycle of finding the right fit again. It isn't easy as our recruiters can tell you.

CCG: Any wild cards out there we should be watching?

Miller: The biggest one is the global effect of the volatile wars in Asia and the Middle East. They are certainly devastating lives in those regions, sadly, and could throw the economy into a harder landing than desired. Especially if we see unchecked spikes in energy prices.

CCG: Last words, Brian, for us this month?

Miller: In general, the current job market report should do little to deter the Fed at this time from backing off of their “pause” position. After a hot report last month, people who are looking for lower inflation and a stabilization or even a lowering of interest rate will feel encouraged for the first time in over a year.


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