The Current State of the Job Market headed into the 2nd Half of 2022
As a recruitment consultant within the financial services industry, I live and breathe the job market. With ADP releasing its Monthly Payroll report yesterday, I wanted to summarize the key points as well as highlight what I am currently seeing in the market and forecasting ahead in the back half of this year.
3 Key Take-Aways:
Payrolls increased, at a slower rate than expected.
The private sector reported an increase of 128,000 jobs YOY vs the Dow Jones forecast of 299,000. While it is news worthy that hiring is slowing, it is still important to recognize the levels we are coming down from. According to ADP's chief economist Nela Richardson, we are still not yet even at pre-pandemic job growth levels recorded in 2019.
Jobless claims are at the lowest levels since 1969.
Although you may be seeing headlines of layoffs from tech companies as they deal with the volatility of the market, we are still in an extremely tight labor market. Initial jobless claims for the week of May 28th totaled 200,000 - a decline of 11,000 from the prior week.
Small businesses are slowing much faster than large companies.
According to ADP's report, companies of less than 50 workers reduced reduced payrolls by 91,000 people- 78,000 of that 91,000 were of businesses of 20 employees or less. On the flip side of this, companies with 500 or more employees led the way in payroll gains of 122,000. This is particularly important to recognize, as the labor market in corporate America still remains extremely tight, and candidate short.
My Forecast on what is ahead for the job market:
Historically speaking, the second quarter is the strongest quarter for agency recruitment firms as employees focus their searches post-bonus season, which is typically paid out towards the end of Q1.
Due to the intense nature of the current market over the last 24 months, my firm saw record numbers for the first quarter of this year, and was expecting to see continued growth into the strongest quarter of the year, however that has not been the case thus far.
As we approach the close of the second quarter, my team and I have seen a slowing in placements - not due to less open jobs to work, however less candidates willing to move.
From my viewpoint, while the job market is still extraordinarily strong, candidate confidence has been wavering over the last quarter. My hypothesis is this is due to the uncertainty in the capital markets, inflationary pressures, and speculation of an incoming Recession. I have seen candidates become more hesitant on taking more risk in their career moves, deciding ultimately to stay with their current firm after undergoing the interview process.
I have been outspoken on my opinion that we will not go into a recession like so many are predicting, with my argument mostly predicated on the strength of the current job market. As we see the rate of growth start to slow in hiring, we will see the job market begin to stabilize. We should also see an easing to inflationary concerns in the back half of 2022, which may also calm concerns in the capital markets.
Less than ~2% of college educated workers in the US are currently unemployed. The majority of layoffs are coming from small businesses with under 20 employees. As the market begins to settle, I believe we will see consumer sentiment increase, and confidence become more restored in candidates looking to make career moves.
We are still hiring at paces well above the pre-pandemic level, and it is important to remember even in 2019, the labor market and broader economy was still very strong.
All in all, I believe that while the days of the mania of job movement in the labor force may be behind us, I predict we will continue to see strength in corporate hiring, and plenty of opportunity for career advancement in the job market.