It’s been a hot spring for the American labor market, and while the summer forecast is milder, it’s not clear when the cool-down will begin.
The last three months have seen an upswing in job creation, bending what had been a bumpy but definite downtrend since the post-pandemic resurgence. In the April report from the Labor Department, coming Friday morning, economists expect to see an additional 240,000 jobs, which would be slightly less than the first-quarter average but more than the pace over the second half of last year.
Does that mean the labor market is taking off again without ever having touched down? Analysts doubt it — in part because the (literal) weather may have added some (figurative) heat, allowing sectors like construction and retail to add more jobs than they otherwise might have.
“I feel like a broken record, because economists are always blaming weather effects this time of year, but it really was a record warm winter,” said Stephen Brown, deputy chief North America economist for Capital Economics.
Business surveys, like those conducted by the Institute for Supply Management and National Federation of Independent Business, have reflected plans to hire fewer people over the coming months. Other indicators of demand for labor, such as job openings, have receded significantly. Workers are quitting their jobs at even lower rates than they were in 2019.
At the same time, layoffs have drifted along at a low level, and wage growth has remained strong. In the latest indication that workers are still getting raises, the Employment Cost Index — which measures other employer-provided benefits as well as pay — rose faster than expected in the first quarter.
A possible reason: Instead of allowing their workers to jump for the next opportunity, employers are making it worth their while to stick around.
“If that’s the case, you might offer a little more compensation, a little more on the retirement side,” said Belinda Román, an associate professor of economics at St. Mary’s University in San Antonio. “You don’t have that cost of onboarding and starting over again if you can hold on to them.”