Could there finally be a slowdown in the American labor market?
From payrolls to vacancies to unemployment claims, every piece of official data on the labor market shows that demand for labor is still extremely strong and supply is still limited. With market indicators indicating the Fed now has at least three-quarters of a point to go before pausing, this has caused investors to reevaluate the notion that the Fed is ready to implement only two more quarter-point raises before pausing.
There are, however, some new indications that the labor market may be slowing down. The online job portal ZipRecruiter released its fourth quarter numbers on Wednesday. Although revenue exceeded estimates, it decreased by 4% from the same quarter a year earlier. A direct contrast to the hiring surge in the fourth quarter of 2022 and “a continued downturn in the hiring market” were blamed by management.
Perhaps even more significant is that ZipRecruiter’s management stated it anticipates sales to decrease between 13 and 15 percent for the entire year and between 23 and 20 percent from last year’s level in the first quarter.
Tim Yarbrough, the chief financial officer, said the following on a conference call to discuss the results:
“The first signs of what would turn out to be a steady fall in the number of jobs listed appeared in June 2022. The macroeconomic environment is getting more challenging as we begin 2023. Employers are becoming less willing to pay for employees, and many businesses are implementing layoffs as a result of financial constraints. We observed that online job posts in our area did not exhibit a more normal seasonal rebound from the lows of the December holiday period.”
Ian Siegel, the chief executive and co-founder, had a similar message:
“And to start, I just want to be as explicit as I can about the fact that the macroeconomic downturn we are currently experiencing is real. Additionally, internet hiring has actually decreased nationwide, particularly among SMBs. Consequently, if you look at other job companies of our size, they’re making the same point that we are today. And in line with what you might anticipate from a macro downturn, there is an increase in job applicants. It will take these job seekers longer to find employment when there are fewer available positions, and that is exactly what is happening right now. In light of this context, we assumed—using the data that was available to us from January—that the recruiting market would be more accommodating throughout 2023.”
Not just ZipRecruiter is observing these indications of a slowdown. In a blog post published two weeks ago, LinkedIn’s head of Economics and Global Labor Markets, Rand Ghayad, said that hiring through the country’s largest employment-focused social networking platform fell by 23 percent in January over the previous year and by 0.7 percent from December.
On Wednesday, shares of ZipRecruiter decreased by 26%. The stock has increased by 4.1 percent so far this year.
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