The temperature of the jobs market may finally be falling, albeit slowly, according to data from the U.S. Job Openings and Labor Turnover survey.
With the Federal Reserve set to announce another 25-basis-point rate hike today, March layoffs at all-size U.S. businesses rose 16% from February to 1.81 million. That was the highest total since December 2020 and in line with pre-pandemic totals, according to the JOLTS data from the Bureau of Labor Statistics.
Layoffs are also rising as a percentage of total employee-worker separations. According to a post by Guy Berger, principal economist and head of macroeconomics of LinkedIn, layoffs’ share of separations was nearly 31% in March, compared with 23% a year ago.
Even though job openings at U.S. companies also fell in March, Elise Gould, senior economist at the Economic Policy Institute, said, “the more persuasive signs of [economic] cooling are coming from rising layoffs.”
Headcount reductions by small businesses were high in March. Companies with nine or fewer employees saw double the job cuts from February. And layoffs at those size companies and businesses with 10 to 49 employees numbered 906,000, about half of the total monthly layoffs for all companies.
On net, 15% of small business owners surveyed by the NFIB in late March indicated they planned to create new jobs in the next three months, compared with 23% last September.
Small businesses also had one of the largest pullbacks in job openings in March, as open positions at 49 employees or fewer firms fell 5% from the previous quarter. Those businesses have cut job openings by one million since last October. Job openings at all-size businesses dropped 3.8%, to 9.6 million.
A new metric from the Conference Board, the Job Loss Risk Index, looked at the industries with the highest overall risk for layoffs should a recession occur.
Jobs in the information services industry topped the list. Job cut announcements tracked by Challenger, Gray & Christmas showed the tech industry slashing headcount by 102,391 workers so far in 2023, a pace that would eclipse 2001 numbers, the firm said.
The Conference Board report pegged jobs in transportation and warehousing; construction; and repair, personal and other services as being the second-most vulnerable. Expansion of e-commerce increased hiring in transportation and warehousing as consumers’ preferences for online shopping were catalyzed during lockdowns, the Conference Board said, but a decline in discretionary spending will cause these industries to shed workers, according to the report.
Weakness in the housing market will reduce demand for new construction projects or in-home repair and maintenance.
In contrast, the Conference Board expects layoffs to be limited in the accommodation and food services industries, where employment is about 2% below pre-pandemic levels. Some businesses still face problems finding enough workers.
The U.S. employment report, due out Friday, is expected to show a drop in jobs added to nonfarm payrolls in April. Economists forecast about 180,000 jobs added, from 236,000 In March, according to consensus estimates from Refinitiv.