Labor Demand Softening

Apollo Chief Economist

The consensus expects nonfarm payrolls on Friday to come in at 180,000 jobs added in November. This bullish consensus estimate is likely based on one single indicator, namely jobless claims.

But other indicators are showing ongoing signs of weakness in labor demand, which would point to a weaker employment report for November:

1) The quits rate, i.e., the share of workers voluntarily quitting their jobs every month, continues to trend lower, see the first chart below.

2) More consumers are starting to say that it is harder to find a job, see the second chart below.

3) The work week for private sector workers has been declining, suggesting labor demand is weaker, see the third chart.

4) There is now very little difference between wage growth of job switchers and job stayers, suggesting that job switchers are no longer able to get big pay increases, see the fourth chart.

5) The number of job openings has decreased since the Fed started raising interest rates, see the fifth chart.

6) The pace of job growth has declined as the Fed has raised interest rates, and with the Fed on hold well into 2024, this trend will likely continue, see the sixth chart.

Weaker labor demand: The share of workers voluntarily quitting their jobs declining
Source: BLS, Haver, Apollo Chief Economist
“Jobs hard to get” minus “Jobs plentiful” points to a rise in the unemployment rate
Source: The Conference Board, BLS, Haver, Apollo Chief Economist
Weaker labor demand: Average work week is declining
Source: BLS, Haver, Apollo Chief Economist
Weaker labor demand: Wage growth for job switchers is declining
Source: FRB of Atlanta, Haver, Apollo Chief Economist
Weaker labor demand: Job openings trending lower
Source: BLS, Haver, Apollo Chief Economist
Source: BLS, Haver, Apollo Chief Economist
Source: BLS, Haver Analytics, Apollo Chief Economist

Download hi-res chart(s)

This presentation may not be distributed, transmitted or otherwise communicated to others in whole or in part without the express consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).  

Apollo makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made during this presentation, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of the speaker as of the date indicated. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Apollo does not have any responsibility to update this presentation to account for such changes. There can be no assurance that any trends discussed during this presentation will continue.   

Statements made throughout this presentation are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed during this presentation, including consulting their tax, legal, accounting or other advisors about such information. Apollo does not act for you and is not responsible for providing you with the protections afforded to its clients. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by Apollo. 

Certain statements made throughout this presentation may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.