The US economy shrank in the first half of the year, consumer sentiment plunged amid high inflation and unrest overseas, and some of the biggest names in business have cut thousands of jobs — but America's labor market hasn't skipped a beat.
US employers announced just 20,485 layoffs in August, the lowest year-to-date total since 1993, according to data released Thursday from outplacement firm Challenger, Gray & Christmas.
A separate report from the Labor Department revealed that initial jobless claims for the week ended August 27 fell to 232,000, a drop of 5,000 from the previous week's level, which was revised downward by 6,000 claims. Initial claims are now at their lowest level in two months.
Recent employment data, including the July jobs report and labor turnover survey have also defied analysts' and economists' expectations that the labor market would cool down after it neared its recovery from the pandemic and as the Federal Reserve took extreme measures to tame inflation and squelch demand.
In July, employment growth was expected to slow to around 250,000 jobs, with the number of open positions falling to 10.5 million. Instead, 528,000 jobs were added and available jobs surged to 11.2 million.
"The labor market isn't just running hot, it's like a burning inferno," said Megan Greene, global chief economist for the Kroll Institute and a senior fellow at Brown University.
The hot job market complicates matters even further for the Federal Reserve, which views the current ratio of two job openings for every job seeker as a potential driver of higher wages that, in turn, can lead to higher prices and keep inflation elevated. Friday's federal jobs report will be closely watched for signs that employment growth is slowing.
Economists estimate that about 300,000 jobs will be added in August, a considerable drop from July and the lowest monthly gain since April 2021. The August jobs report is due out Friday morning.
