June Jobs Report Preview: Job Gains to Cool Amid Slowing Economy
Daniel Zhao
Chief Economist at Glassdoor | Jul 6, 2022
This Friday, the Bureau of Labor Statistics (BLS) will release the June jobs report. Despite evidence that the economy is slowing and broad concerns about a recession, the job market remains a bright spot. Demand for workers remains extremely strong and that is likely to support job gains in June, though slightly cooler than what we’ve seen in recent months. With the economy nearing an inflection point, the June jobs report is likely to show a labor market that is tapping the brakes, but still coasting.
Here are three trends we'll be watching for in the June jobs report:
- Jobs growth to decelerate. As the economy shows clearer signs of a slowdown in June, jobs growth is still likely to remain positive, although slow substantially.
- Unemployment rate flat. The unemployment rate has held at 3.6 percent the last two months and is likely to stay close to that level in June. As the economy slows through the rest of the year, the question remains whether the unemployment rate in June will be the lowest level we reach in this expansion.
- Watch for industries with slowing hiring. Jobs growth has been widely distributed across industries in the last few months, raising questions about which industries will drive any hiring slowdown in June. Retail and transportation & warehousing may slow as consumer spending pulls back. Prominent reports of layoffs and hiring freezes in information, financial activities and professional & business services could foretell slowing job gains in June.
Employee Fears of Recession & Layoffs Continue to Rise
On Fishbowl by Glassdoor, a social networking platform for professionals, discussions mentioning layoffs rose 10 percent in June. Discussions of layoffs are now at their highest level since October 2020, though are still significantly lower than their pandemic peaks. By contrast, discussions of recession rose modestly (3 percent) month-over-month in June, but are now at their highest levels since March 2020 when the pandemic recession began.
The contrast of recession and layoff discussions suggests that while the fundamentals of the labor market remain strong with healthy labor demand and still-uncommon layoffs, fears about the general economic environment and recession risks are surging.
Conversations about recession and layoffs range from asking for advice on how to plan career moves against the backdrop of an impending recession, to general discussions about layoffs and concerns about power potentially flipping back to employers who may be less amenable to remote work. For example:
- “Clearly, the power has been in the hands of employees during the pandemic. Now that we have all this recession talk; what do you think the outcome of power flipping to employers will be? Personally I could see the firms ending the hybrid work environment and forcing us all back to the office 5 days/week.” –Anonymous Employee at KPMG
- “Anyone else nervous about lateralling at the moment? I have been thinking about it for a while but say I get an offer in a month and start in 3 months, I am then on probation for 6 months… by then the recession will definitely have hit and the lack of job security really freaks me out. It’s like there’s never a good time to leave my firm.” –Law Associate
- “What is the most recession proof job out there?” –Anonymous Employee
- “The feminine urge to rat out your former biglaw firm for stealth laying off only female associates during the pandemic” —Associate
Conclusion
Despite the relatively strong labor market, recession fears have been surging and employees are not immune. The June jobs report is likely to show a job market that is still plowing forward but facing increasing headwinds. Payrolls may end up being a lagging indicator this business cycle, as new hires in June reflect staffing decisions made months ago amid this past spring’s frenetic hiring. Employers who had—until very recently—been hiring on all cylinders are suddenly grinding their recruiting motors into a lower gear. The tight labor market helped shift the balance of power towards workers over the last year, but with fears of a recession looming on the horizon, that leverage could prove fleeting. As employees prioritize job security and hiring demand cools, trends like the Great Resignation and swift wage growth could start to show cracks.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
Tags:Labor MarketUnemployment
