Cooling US Employment... American Job Loss Concerns Highest in 10 Years

New York Fed Releases July Labor Market Survey
4-Month Unemployment Probability Rises from 3.9% to 4.4% in a Year
4-Week Job Search Rate Hits Record High at 28.4%

The proportion of American workers who believe they are likely to lose their jobs within the next four months has reached an all-time high. The percentage of workers actively seeking employment over the past four weeks also hit record levels. This is seen as another sign of employment instability amid growing concerns about a cooling labor market following the recent rise in the unemployment rate earlier this month.

According to the 'July SCE Labor Market Survey' released on the 19th (local time) by the Federal Reserve Bank of New York, the average probability of unemployment within four months rose to 4.4%. This marks a 0.5 percentage point increase from 3.9% a year ago and is the highest level since 2014.

The likelihood of finding a new employer increased from 10.6% to 11.6% over the past year.

This survey, conducted every four months with 1,000 workers, gathers opinions on job situations and outlooks to track labor market trends.

The proportion of workers who reported looking for a job in the past four weeks rose from 19.4% a year ago to 28.4%. This job-seeking rate is the highest since the survey began. The increase was particularly notable among those aged 45 and older, with a high school education or less, and households earning $60,000 or less annually.

The turnover rate also reached its highest level since the survey started, rising from 5.3% to 7.1% during the same period. The percentage of workers employed four months ago who were still working at the same job in July was 88%, the lowest ever recorded.

Overall, worker satisfaction with their jobs declined. Satisfaction with wages dropped from 59.9% to 56.7% over the year. Benefits satisfaction fell from 64.9% to 56.3%, and satisfaction with promotion opportunities decreased from 53.5% to 44.2%. These trends were especially pronounced among women, those with a high school education or less, and households earning $60,000 or less annually.

The proportion of respondents who said they are likely to work beyond age 62 was 48.3%. This is an increase from the previous March survey, which recorded a historic low of 45.8%. The percentage who said they would have to work past age 67 rose from 32% to 34.2% over the past year.

The New York Fed stated, "This survey shows a sharp increase in the proportion of job seekers compared to a year ago, and the average expected probability of unemployment over the next four months has also reached its highest level. Satisfaction with wages, benefits, and promotion opportunities at current jobs has all deteriorated."

The survey results come amid signs of a slowdown in the U.S. labor market. Earlier this month, the U.S. Department of Labor reported a 7th-month unemployment rate of 4.3%, up 0.2 percentage points from June's 4.1%, unexpectedly fueling concerns about employment cooling and a potential recession.

The New York Times (NYT) commented, "This survey may indicate meaningful cracks forming in the labor market. Although it is a single report, it is a worrying signal emerging at a critical moment when central banks and economists are on alert for labor market deterioration."

Market participants expect the U.S. Department of Labor's August employment report, to be released on the 6th of next month, to confirm the labor market's trend. The July employment report, released earlier this month, showed the unemployment rate rising to 4.3% from 4.1% the previous month, heightening recession fears. The August employment report, released before the Federal Open Market Committee (FOMC) meeting in September?where the Federal Reserve (Fed) is expected to cut interest rates for the first time?will likely have a significant impact on the rate decision.

Michael Wilson, strategist at U.S. investment bank Morgan Stanley, analyzed, "A strong jobs report that reverses the slowdown seen in July would provide confidence that growth risks have eased. Conversely, a weak report would likely bring growth concerns back to the surface."