Recent data indicates a decrease in hiring activity across industries, suggesting a weaker U.S. job market. In July, the country witnessed the addition of a respectable 187,000 new jobs; however, nearly half of these were concentrated in just a few sectors.
The diffusion index – a measure in the monthly jobs report that compares the percentage of industries hiring to those losing jobs – fell from 58.8% in June to 57.2% in July. This decline signifies a concerning trend in the broader economy and marks the second lowest reading since the pandemic began.
Remarkably, as little as a year and a half ago, approximately 85% of all industries were actively hiring – an unprecedented level based on historical records that date back to 1991.
July’s job growth primarily stemmed from health care and social assistance sectors, which accounted for nearly half of the new jobs created – a continuation of the trend seen in 2022. Within this category, various roles related to day care, elderly care, and related services contributed significantly.
Another notable sector with increased hiring in July was leisure and hospitality. This industry saw the addition of 17,000 new jobs, with a noteworthy rise in hiring within establishments such as hotels and amusement parks. Additionally, there were 15,000 new government positions created.
Health care, government, and leisure and hospitality accounted for approximately 63% of all jobs created thus far in 2023. This mirrors their contribution to new employment opportunities in 2022, where these industries were responsible for 44% of job growth.
Interestingly, an employment report released by payroll processor ADP in July revealed that nearly two-thirds of new jobs were created within the leisure and hospitality sector. According to the report, the private sector added 324,000 jobs during the previous month.
On the other hand, several industries experienced job losses in July. The professional services segment saw a decrease of 22,100 temporary help roles, while transportation and warehousing witnessed a reduction of 8,400 jobs.
The diminishing number of industries actively hiring is indicative of labor market erosion, a concern that the Federal Reserve is closely monitoring as it deliberates on potential interest rate adjustments in response to heightened inflationary pressures.
Leave a Reply