The U.S. labor market is currently stable, although there is a declining trend in job gains.
Job Trends and Recovery
As of early November 2023, the number of U.S. jobs is 4.5 million higher (+3%) than it was in pre-February 2020. COVID-19 caused a loss of 22 million jobs in just two months by May 2020, and it took 26 months to recover employment to pre-crisis levels by July 2022.
From July 2022 through October 2023, the average monthly growth rate is 287k jobs per month. The pre-crisis job growth trend from 2011 to 2019 averaged 190k jobs per month.
Within this period, growth rates vary. From July to December 2022, the increase was 333k jobs, from the beginning of 2023 to May 2023 (5 months), it averaged 287k jobs, and from June to October 2023, the growth rate dropped to 191k jobs, which is essentially in line with the 2011 - 2019 trend.
In October, 150k jobs were created, with almost 100k in the private sector. While half as many jobs are being created now as in H2 2022, there is no significant deviation from the historical average trend, meaning it is still within the norm on the downside.
Deviation from Trend
The deviation of the current number of jobs from the 2011 - 2019 trend is 3.8 million, whereas a year earlier, the gap was 4.5 million employed. According to our calculations, the overall job deficit is estimated to be at 2.6 - 3 million jobs, based on factors like the structure of the economy, the volume of demand, and labor productivity.
That is why the growth of employment continues, as the demand for goods and services remains strong, including demand in the corporate segment.
The working-age population not in the labor force as a percentage of the population is 0.6% above the historical average, which amounts to over 1.7 million people, with 0.5 million attributed to demographic reasons and 1.2 million out of work due to growth in rental income (assets, benefits, dependents).
Open vacancies are 2.5 million higher than in 2019 and 1.5 times the number of unemployed, which is an improvement from the twofold gap in March 2022, but an imbalance still exists.
The first mass layoffs may begin in early 2024.
Conclusion
Overall, the U.S. labor market remains stable despite a downward trend in job numbers. U.S. jobs increased by 3% through February 2020, adding 4.5 million positions after losing 22 million jobs to the pandemic by May 2020, with the recovery period lasting 26 months through July 2022. Monthly job gains averaged 287,000. From July 2022 through October 2023, monthly job gains also averaged 287,000, surpassing pre-recession levels. Despite fluctuations, 150,000 jobs were added in October 2023, still in line with historical averages. While the deviation of 3.8 million jobs from the 2011-2019 trend remains, driven by factors such as demographics and rental income, strong demand for goods and services continues to drive job growth. The labor market, although showing improvement, remains imbalanced, and the potential for mass layoffs in early 2024 underscores the need for ongoing monitoring.