From House and Pugliese at WF today:
- The buoyancy of nonfarm payroll growth has seemed at odds with other signs that the jobs market is beginning to sour. …
- Yet the jobs market is hardly falling apart. A holistic look at the data suggests that directionally the labor market is weakening, but at a measured pace and from a remarkably strong starting point. Not only do signals of demand remain strong on an absolute basis, but job switching remains elevated and the unemployment rate remains exceptionally low at 3.7%.
They include several graphs which support the view of growing employment/light labor market conditions in 2022H1.
Here’s the labor market heat map, with a 2022H1 circled in red.
Source: Wells Fargo (1/5/2023).
The predominance of green/yellow highlighting is certainly not suggestive of a recession beginning in 2022H1.
The authors do note that the labor market is cooling off, perhaps faster than indicated by the establishment survey – informing views on the current outlook.