May Jobs Report Preview: April Flowers to Bring More May Flowers

This Friday, the Bureau of Labor Statistics (BLS) will release the May jobs report. In the last few months, the job market has continued to defy gravity, adding a steady clip of jobs and holding unemployment at historically low levels despite a backdrop of rising interest rates, banking turmoil, tech layoffs and debt ceiling negotiations. After a healthy April jobs report, May is likely to repeat with an equally strong performance.

Here are three trends we'll be watching for in the May jobs report:

Is the Job Market Hard- or Soft-Boiled?

The jobs report is expected to show a resilient labor market, highlighting an ongoing divide in hard vs. soft economic data. Hard economic data shows a labor market that is normalizing from extremely tight conditions where job openings, quits and wage growth are moving back towards pre-pandemic levels, but have not yet fallen past them.

Another hard data point in the camp of a stronger labor market is unemployment insurance claims. While continuing claims steadily increased from October 2022 through April 2023, continuing claims dropped in May by 49,000 (from the April to May jobs report reference weeks). This signals that unemployed Americans are still finding new jobs even if it’s less easy to do so now than it was a year ago.

By contrast, soft economic data continues to show American workers are deeply concerned about the job market. On Fishbowl by Glassdoor, a social network for professionals, discussions of layoffs have skyrocketed, rising almost four-fold (+298 percent) year-over-year in May 2023. This exceeds the pandemic peak and vastly outstrips discussions of inflation or recession which have actually declined over the last year.

Similarly, employees on Glassdoor report worsening faith in their employers. Employee ratings of their employers’ business outlook have deteriorated, especially in industries like tech that have been at the forefront of recent layoffs. Three in ten (30.4%) tech employees rate their employers’ 6-month business outlook as negative, the worst level of pessimism in our data stretching back to 2016. Not only is this a concerning indicator of the health of these companies from employees on the ground, but it also could compound by reducing productivity as employees look for the exit, discouraging employees from taking innovative risks, or spending more conservatively as consumers.

For the time being, the hard economic data shows a strong labor market and the jobs report is likely to add more evidence of a resilient job market. However, as real-time data gives us a peek into the yolk of the labor market, deteriorating employee sentiment is an indicator to watch that the labor market is squishier than it appears.

Methodology

The second chart uses data from Fishbowl by Glassdoor, a social network for professionals. It shows the share of posts/comments that mention certain keywords like “inflation”, “layoffs” and “recession” from January 1, 2020 through May 23, 2023. The analysis groups together related keywords like “laid off” or “fired” into “layoffs”.

The third chart shows the share of full-time and part-time employees in the tech industry who report that their employers’ 6-month business outlook is “Negative” on Glassdoor. Employees have the option to rate their employers’ business outlook as “Positive”, “Neutral” or “Negative”. Data is from January 1, 2016 through May 23, 2023.