US labor market stays hot despite recession fears

“As with other recent jobs reports, the employment picture painted by the household survey is much less optimistic than the payroll survey,” he said. “More puzzling are the muted gains in household employment, which grew by just 179,000 in July. While still reflecting growth, this figure is far below the increases seen in the payroll survey and illustrates a continuing divergence between these two measures that we have seen for a number of months now.

“For instance, since March, the payroll survey has shown roughly 1.7 million jobs added, while the household survey has actually shown a decline of 168,000 employed persons. Part of this divergence can be accounted for by a difference in definition; when adjusting the household survey to match the definition of employment from the payroll survey, total job gains are 722,000 over this period, still less than half of the gains reported in the payroll survey. This divergence gives us pause when interpreting the overall health of the labor market; in particular, compared to the robust job gains in the payroll survey, we feel the more subdued picture in the household survey may make more sense in the context of other recent economic indicators.”

David Peters, a financial advisor and host of the Accountable Podcast, also highlighted that job openings remain elevated at 11.3 million. However, he advised employees to stop assuming they could switch jobs at will.

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“There are about two open jobs for every applicant, and job switching also remains high,” Peters said. “With a recession looming, people have to wonder if this rosy optimism is based on habit (rather than an objective look ahead). Workers have been able to switch freely from job to job over the last year or so – and employers have seen growth in sales in spite of supplier shortages, bear financial markets, and increasing costs. Employers and employees may be looking at the recession as something that may not affect them much. This may be leading to a false sense of optimism.