August Jobs Report Preview: Labor Market to Fall Back to Trend
Daniel Zhao
Chief Economist at Glassdoor | Aug 31, 2022
This Friday, the Bureau of Labor Statistics (BLS) will release the August jobs report. Last month, the labor market surprised with accelerating job gains, but that surge is unlikely to be fully sustained in August. The economy is growing but does seem to be slowing, which will likely mute job gains moving forward. Overall, the labor market is healthy but the slowing economy means it’s more likely that July was a positive fluke, rather than the start of an accelerating trend.
Here are three trends we'll be watching for in the August jobs report:
- Jobs growth to pull back. Job gains jumped in a surprise beat in July, but as the broader economy slows, job gains are likely to revert back to the slower growth we’ve seen earlier in the summer.
- Unemployment rate flat. The unemployment rate hit 3.5 percent in July and is likely to remain flat in August. The labor market is continuing to grow, but further improvement in the unemployment rate will be unsteady as it is already at very low levels.
- Labor force participation to rise. Labor force participation has been trending downward since the spring despite high labor demand and continuing job gains. We continue to watch labor force participation closely to see if it will reverse direction.
Inflation Still a Hot Topic
Employee discussions of inflation are still hot but have plateaued. The share of reviews on Glassdoor that mention inflation and cost-of-living have fallen 12 percent in August 2022 from July, though inflation discussions are still higher than where they started the year and are up 84 percent year-over-year.
The decline in employee discussions of inflation in August follows what will hopefully be the peak in inflation. Prices were unchanged in July compared to the month before, according to the latest CPI report from the BLS, as gas prices began to fall in late June. As inflation begins to moderate, employee concerns about inflation should follow, but for the time being, employees are still deeply concerned about the rising cost of living and the failure of wage growth to keep pace with inflation.
Preliminary Benchmark Revisions
Earlier this month, the BLS released their preliminary benchmark revisions for March 2022, estimating an additional 462,000 jobs should be added to the March 2022 payroll employment level. Depending on the final revisions, which are due to be published along with the January 2023 jobs report, the revision may be enough to bump up 2022 job gains from 6.7 million to over 7 million, which would easily be the largest annual payroll gain on record.
Conclusion
The labor market has been a pillar of strength during the recovery and, even as the economy slows, we’re surprisingly still getting data that impresses. While the tight labor market is driving wage growth up, inflation is still surpassing wage growth for the majority of workers, keeping the issue top of mind. As the Fed moves to bring inflation down, it’s likely we’ll continue to see inflation exceed wage growth in the short-term. But if the Fed can bring the economy in for a soft landing, the labor market looks poised to keep the scale tilting towards American workers.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
Tags:Labor Market
