Soft Landing in Goods. No Landing in Services.

Apollo Chief Economist

Looking at job growth since the Fed began to hike raises questions about whether the labor market is undergoing a soft landing or reacceleration, see the first chart below.

The split between the goods sector and the private service sector shows what looks like a soft landing in the goods sector and a reacceleration in the private service sector, see the second and third charts.

The no landing in services is consistent with ongoing strong demand for airlines, hotels, restaurants, concerts, and sporting events.

With the service sector making up 72% of total employment and generally less sensitive to Fed hikes, and with jobless claims still at very low levels, the upside risks to employment over the coming months are significant.

Labor market: Soft landing or reacceleration?
Source: BLS, Haver Analytics, Apollo Chief Economist
Soft landing in goods employment
Source: BLS, Haver Analytics, Apollo Chief Economist
Reacceleration in private service sector employment
Source: BLS, Haver Analytics, Apollo Chief Economist

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