The hiring slowdown of 2023 spilled into January, and pressure on wages continues to ease. The pay premium for job-switchers shrank to a new low last month.
Another Soft Landing Proclamation
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay. Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” says Nela Richardson, Chief Economist, ADP.
ADP National Employment Report
The ADP National Employment Report shows Private Sector Employment Increased by
107,000 Jobs in January; Annual Pay was Up 5.2%
Job Switching Payouts
- Year-over-year pay gains for job-stayers reached 5.2 percent in January, down from 5.4 percent in December.
- For job-changers, pay was up 7.2 percent, the smallest annual gain since May 2021.
- Median Change in Annual Pay (ADP matched person sample) Job-Stayers 5.2%, Job-Changers 7.2%
ADP Notice
January’s report presents the scheduled annual revision of the ADP National Employment Report, which updates the data series to be consistent with the annual Quarterly Census of Employment and Wages (QCEW) benchmark data for March 2023. In addition, this revision introduces technical updates, namely, in re-weighting of ADP data to match QCEW data. The historical file was updated to reflect these revisions.
Notice Translation
ADP revises its data to match annual BLS data from March of 2023. The BLS will do the same in its annual revisions.
The BLS does not even back adjust the numbers so its historical record is bogus. And despite being incredibly lagging, the Fed makes key decisions on the data.
Job Openings Rise in December But Quits Tell the Real Story
There’s lots of meaningless chatter yesterday about job openings. However, actions speak louder than openings.
ADP reports the premium for job switching is dropping rapidly. That show up in the huge slide in quits.
For discussion, please see my report yesterday, Job Openings Rise in December But Quits Tell the Real Story
January and February are typically weak months for jobs growth. Let’s check back in March and see if there’s progress. Keep in mind with 3.8% unemployment, the economy is creating jobs at the margins. There’s not a lot of great paying, non-governmental jobs being created right now which is pretty normal / expected. Let’s get excited about a recession when those monthly jobs number goes negative.
There’s $2T worth of reasons (deficit spending) why that may not happen anytime soon. But between now and then, let’s make a big deal about a soft January payroll report that’s not even the official number to be had Friday.
Add on job hoppers are gone, and stability is the new thing now. As spending falls and falls, anxiety and mistakes will continue to be made, trying to prevent the inevitable unfortunately. Quickly and then all at once people will get it. Then that long unrecognizable recession will be here, and then we will see where things go, and down rather quickly in my opinion unfortunately.
As many people who have job-hopped in the last few years I would expect the quit rate to drop off for awhile.
I agree and that still doesn’t mean the job market is really softening. It just means that it’s returned to a more normal state.
There seems to have been a pickup in job cuts in the last two months, but even that doesn’t mean the job market is truly softening.
What’s likely happening is companies are cutting jobs from over hiring and once these cuts are done, their bottom line / profits will be bolstered.
With $2T in deficit spending, I just don’t see how we see a recession anytime soon. For the later 1/2 of 2023, I was pointing to early 2025 as being a possibility, but even that seems to be less & less likely.
A dearth of competent candidates is all you need to know. College degrees are granted for race and participation in order to fill government quotas. Private colleges grant a degree for the price of tuition.
I’m surprised you didn’t include “water is wet” in your comment, Rumpelstiltskin. Did you just wake up from a time where college degrees indicated competency?
News item today –
The burgeoning US debt pile is akin to a “death spiral” that only a “miracle” could extract the country from, economist and ‘Black Swan’ author Nassim Taleb said at a business event on Monday, as quoted by Bloomberg.
Sage commentary!
For all you youngsters out there in 6th grade math class, this is called compound interest and exponents.
Throw Euler’s number at them for continuously compounding interest. Nice!