U.S. Job Market Shows Signs of Cooling, But Some Sectors Remain Strong
The U.S. labor market, once a beacon of strength, is showing signs of cooling, with job growth slowing more than expected and the unemployment rate rising. Job seekers are facing increased competition, particularly young workers under 24. "The soft landing in the U.S. labor market is in danger," warns Nick Bunker, Economic Research Director for North America for Indeed Hiring Lab. While some sectors like information services saw job losses, others continue to offer opportunities. This shift raises questions for job seekers navigating a changing landscape.
Key Takeaways:
- Job growth slowed dramatically: Nonfarm payrolls grew by only 114,000 in July, significantly lower than the 179,000 seen in June.
- Unemployment rate ticked up: The unemployment rate rose to 4.3% in July, its highest level since October 2021.
- Entry-level workers face challenges: "Job loser unemployment" has increased, driven by temporary layoffs in sectors like manufacturing. Young workers also face stiff competition.
- Health care remains a strong sector: Healthcare and social assistance saw the most job additions in July, with healthcare jobs across all levels experiencing strong demand.
- Skilled trades in high demand: Industries with aging workforces and those resistant to automation, such as electricians and HVAC technicians, are seeing "insatiable demand" from employers.
A "Warning Sign" From Entry-Level Workers
The slowdown in job growth and rising unemployment are driven by several factors. A key driver is the increase in "job loser unemployment," where workers are temporarily laid off but still maintain a connection to their former employer. This phenomenon is more prevalent in the manufacturing sector.
"They are unemployed, but their connection to their old employer isn’t entirely severed," explained Bunker. "Their probability of finding a job in the next six months is much higher than other unemployed workers."
However, a significant factor affecting unemployment is the competition faced by young workers under the age of 24. "Young workers under 24 are facing increased competition," noted Ali Bustamante, a labor economist and director of the Worker Power and Economic Security program at the Roosevelt Institute.
These Sectors Are Still Hiring
Despite the cooling job market, some sectors continue to see strong growth. "The only constants in this labor market over the last 18 months have been government jobs, health-care jobs and construction, too, remarkably," said Julia Pollak, chief economist at ZipRecruiter.
Health care and social assistance led the way in job creation in July, adding 64,000 new positions. Other growing sectors include:
- Construction: 25,000 new jobs
- Leisure and Hospitality: 23,000 new jobs
- Government: 17,000 new jobs
- Transportation and Warehousing: 14,000 new jobs
- Wholesale Trade: 4,300 new jobs
- Retail Trade: 4,000 new jobs
- Manufacturing: 1,000 new jobs
Some Fields See "Insatiable Demand" from Employers
Navigating the changing job market demands a strategic approach. While certain sectors are growing, cyclicality in the market requires a long-term perspective.
"Health care does make sense," suggested Bunker. This might involve pursuing further education or training. "We see incredibly high demand in health care throughout every level of job for registered nurses, for nursing assistants," said Pollak.
Skilled trades also offer a path forward. "It’s the skilled trades, like an electrician or a [heating, ventilation and air conditioning] technician, where we see insatiable demand from employers and rising wages," Pollak elaborated. These professions offer stability and high earning potential, particularly in industries facing worker shortages.
To Pivot, Assess Your "Transferable Skills"
In a weakening labor market, finding opportunities within preferred industries can be challenging. Bustamante advises job seekers to consider occupations with similar skill sets across different industries. For example, an IT worker seeking a role in a startup may find success in healthcare or government, both sectors experiencing high hiring rates.
"It’s really about not just looking at the industries but ‘really looking at the occupations and where those occupations or opportunities are really present at the moment,’" Bustamante emphasized.
Pollak agrees, emphasizing the importance of transferable skills: "Definitely look at things where you have transferable skills."
Job seekers can enhance their competitiveness by tailoring their resumes, browsing job listings, and applying swiftly. Moreover, harnessing AI tools can streamline the job search process, from resume improvement to interview preparation and role discovery.
"AI can be your best friend," said Pollak.
In conclusion, while the U.S. job market exhibits signs of cooling, job seekers can navigate this change by understanding the shifting landscape, identifying growing sectors, and leveraging their transferable skills. Proactive strategies and effective use of resources are crucial for finding success in a competitive environment.
