A Strong Employment Market May be Showing Signs of Softening

Chart A Strong Employment Market May be Showing Signs of Softening 1 30 20

Employment gains have been a staple of this economic expansion. With few exceptions, the employment market has steadily improved throughout the last decade. As such, employment data is very strong with the unemployment rate at all-time lows, wage growth near cyclical highs, and job openings near all-time highs. With signs of some weakness arriving, investors are wondering how much further the employment picture can improve. One example of weakness is surfacing in the ratio of new hires to job openings. The ratio bottomed in early 2019 and has ticked higher since. This means employers are hiring new workers at a faster rate than they are creating new job openings. While this is not necessarily a bad thing for today – it means more hires – it could spell weakness ahead. Of particular concern: are employers becoming increasingly satisfied with staffing levels? If so, the level of new hires in the future may weaken.