Labor market remains in ‘slack water’ state, economist says

Total nonfarm payroll rose by 57,000 jobs in June, according to the U.S. Bureau of Labor Statistics, considerably fewer jobs than private-sector projections indicated. The unemployment rate ticked down to 4.2%, due mostly to the labor participation rate falling, economists said.

Payroll numbers for April and May were also revised downward by a total of 74,000 jobs, indicating a deeper slowdown may be occurring “despite recent optimism,” Glassdoor’s Chief Economist Daniel Zhao said in a statement.

“There is a moment between an incoming and an outgoing tide when the water hardly moves in either direction – known as slack water,” Laura Ullrich, director of economic research in North America at Indeed Hiring Lab, said in a post. “That is a fair description of the labor market right now.”

Looking at where demand is centered indicates that artificial intelligence may hold strong influence regarding hiring right now, Ger Doyle, regional president of North America at ManpowerGroup, said in a statement — though AI continues to drive cuts in the technology sector most especially, recent analysis indicated.

Employers continue to restructure around the change AI has brought to work, so hiring remains specific to certain skillsets, ManpowerGroup said in a previous report.

“The challenge isn't a lack of opportunity. It's that the opportunities driving growth today increasingly require a different mix of skills than they did just a few years ago,” Doyle said.

That said, the current state of the labor market remains trepidatious.

“The stability of a stagnant labor market depends entirely on separations staying this scarce or, conversely, hires remaining subdued,” Ullrich said. “It would not take much — a modest rise in layoffs, or a few more workers deciding to quit — to pull the net negative.”