US | Is the Labor Market showing warning signs?

There is still no clear indication of a severe slowdown in the labor market, though it has weakened more than it initially appears. The slower rate of job creation, coupled with frequent downward adjustments to monthly employment figures, suggests a labor market that remains robust but not excessively tight.

Key points

• Key points:
• From January to June, job creation reached 1.3 million, 23.2% slower than last year, indicating a solid but not overly tight labor market.
• A significant portion of the dynamics of job creation has been driven by sectors such as healthcare and government rather than by strong cyclical employment resulting from excessive demand.
• The unemployment rate (UR) has gradually risen to its long-term level, influenced by higher labor force participation.
• Despite emerging warning signs, the labor market shows no clear downturn, with wage increases expected to ease further.
• The Fed will likely focus on the labor market to detect any signs of weakening and adjust policies accordingly.

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