Fed Tightening Impact? US Private Employment Halved... Lowest Since January Last Year

[Asia Economy New York=Special Correspondent Joselgina] As the U.S. central bank, the Federal Reserve (Fed), continues its high-intensity tightening, the private employment market is freezing up. Large-scale layoffs are also continuing, centered on big tech companies.

According to the ADP National Employment Report on the 30th (local time), private employment in U.S. companies increased by 127,000 in November. This is about half the increase in private jobs in October (239,000). It is the lowest since January last year. It also falls far short of the expert forecast (200,000).

By industry, jobs sharply decreased in manufacturing (-100,000), professional and business services (-77,000), finance (-34,000), and information services (-25,000). On the other hand, jobs in leisure and hospitality increased by 224,000.

However, despite this slowdown in employment, wage growth in the private sector continued. In November, wages at private companies increased by 7.6% compared to the same month last year.

On the same day, the U.S. Department of Labor released the Job Openings and Labor Turnover Survey (JOLTS), which also confirmed a decrease in job postings. Last month, job postings were 10.3 million, down 353,000 from the previous month. Compared to the same period last year, it decreased by 760,000.

These indicators suggest that the overheating of the U.S. labor market is cooling down. In a situation where concerns about a recession are rising due to high-intensity tightening, demand for job openings is also slowing. Accordingly, investors’ attention is focused on the employment report to be released on the 2nd of next month. This report, which the Fed closely monitors, is considered a more accurate indicator showing the overall employment status in the U.S., combining both the private and public sectors.

Recently, large-scale layoffs have continued, centered on big tech companies such as Meta Platforms, Twitter, and Amazon. On this day, delivery service company DoorDash announced it would lay off 1,250 employees. Additionally, cryptocurrency exchange Kraken also announced it would lay off 1,100 employees due to the downturn in the coin market and the fallout from FTX’s bankruptcy. This accounts for about 30% of its total workforce.