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The Bayard Brief — February 2023

Labor Market InsightsLabor Market Insights

January's Blockbuster Job Gains, Cooler Wage Growth Favor Soft Landing

Introducing the new year with blockbuster results, January's job report managed to shatter expectations, with 517,000 new nonfarm payrolls that nearly tripled economists’ predictions of 188,000 jobs.

Job Seeker Traffic

On the whole, job traffic trends align with the typical rise in jobseeker activity after the holidays, aside from an early ramp-up in searches during the last week of December. Generally, job seekers resume their interest and search in January — so the early energized activity could suggest consumer anxiety as lingering inflation cuts into already-cooling wage gains.

Click Trends

In January, clicks were down more than 14% from last year (bear in mind that 2021 and early 2022 are outliers, thanks to a more dramatic recovery for jobs and job seekers after the initial pandemic crash). Additionally, clicks are down roughly 4% compared to pre- pandemic levels (January 2020).

What To Expect

So, what does January’s performance mean for the state of hiring in 2023?

From an overarching viewpoint, January’s report has highlights for both employers and job seekers, though exceptionally robust gains belie residual uncertainties. Moody's Analytics expects an addition of 856,000 jobs this year or an average of 71,000 per month — well under the pre-COVID average of around 200,000 jobs monthly. Less optimistically, Oxford Economics and Barclays forecast hundreds of thousands of employment losses.

In the interim, at least, the market hasn’t shown sweeping signs of change. Throughout January, Americans worked an average of 34.7 hours per week, an uptick from 34.4 hours the previous month and the highest number since last March. In other words, elevated demand continues and will probably persist for the time being.

But it also appears more and more likely that employers will regain some leverage in 2023. In an additional advantage for employers, labor force participation hit its highest level since March. A greater labor supply relieves both worker shortages and wage pressures, allowing employers to offer fewer incentives to appeal to candidates.

Regardless, employers shouldn’t take any softening hiring conditions for granted. Companies aiming to source qualified candidates must still respond to job seekers’ needs, even in an evolving market.

Whether job seekers prioritize competitive wages and benefits or remote and hybrid flexibility, meeting their expectations is paramount to successful recruitment and retention. Offering career advancement opportunities to current employees is another way to maintain workplace satisfaction and avoid attribution

Download the full Labor Market Insights report for February here.