It's (still) a no-hire/no-fire job market

Axios

01-07-2025

If you look only at how many Americans are losing their jobs, this appears to be a pretty terrific labor market.
If you look only at how many are being hired for new jobs, it is the weakest in years.
Why it matters: It makes for a labor market in which those who have a job are able to hold onto it — but the outlook for new entrants to the workforce, or those unhappy with their current positions, is much gloomier.
It is a likely factor, for example, in a sky-high unemployment rate among recent college graduates, which has spiked far above the rates for other workers.
Driving the news: New Job Openings and Labor Turnover Survey data out Tuesday morning tells the tale. The number of layoffs fell by 188,000 in May, dropping to a rate only a tick above its multidecade lows.
But the number of people hired into new jobs also fell by 112,000, to a rate significantly below its pre-pandemic levels.
Separately, the Institute for Supply Management said Tuesday morning that manufacturing activity remained in contraction territory in June, adding that "managing head count is still the norm, as opposed to hiring."
State of play: Similarly, if you look solely at initial jobless claims — the number of people who have lost their jobs and therefore file for unemployment benefits — everything looks good.
But the number of continuing claims — people receiving ongoing benefits — has been gradually rising since 2022.
There have been an average of 1.94 million continuing claims for the last four weeks, well above the 1.6 million trend in 2019.
Between the lines: That suggests that while not many people are losing their jobs involuntarily, those who do are finding themselves on the jobless rolls for longer, as employers are reluctant to hire.
What they're saying: "With employers in a holding pattern, job seekers are left in the lurch," NerdWallet senior economist Elizabeth Renter wrote in a note. "It certainly isn't a labor market friendly to the unemployed, even if it remains on solid footing."
"Ultimately, employers are reluctant to make decisions they have to unwind later," Renter added.
Of note: Federal Reserve chair Jerome Powell described this as "a more concerning thing" in his news conference last month — even as he and his colleagues view the labor market as being in basically sound shape.
He noted that "there's not a lot of layoffs, but there's not a lot of job creation. ... If you're out of work, it's hard to find a job."
"So that's an equilibrium we watch very, very carefully, because if there were to be significant layoffs and the job finding rate were to remain this low ... you would have an increase in unemployment fairly quickly."
Reality check: There could be better news on the horizon. The number of job openings spiked by 374,000 in May, perhaps reflecting business confidence rebounding after trade war de-escalation.