US labour market creaks and cracks?
The US labour market has been resilient and recovered robustly since Covid but signs are emerging of a slowdown. Overtime hours, temporary employment and job openings are all falling which signify that the employment situation is weakening.
Declines in Temporary Payrolls, Overtime hours and Job Openings year on year (yoy) signify that the US economy is slowing.
Source: Bloomberg, Artorius
Wage rates are moderating but remain more elevated than the Federal Reserve’s implicit comfort level given their inflation target. How quickly wage rates slow in the face of weakening labour demand could be the determinant of the path and pace of change in policy making of the Federal Reserve.
Credit concerns
There are initial signs of the impact on lending after the collapse of US banks (Silicon Valley and Signature). The National Federation of Independent Businesses (NFIB), which represents smaller companies, released their most recent survey this week and it showed a significant decline in credit availability.
NFIB survey reflects that credit conditions for smaller US companies have become significantly weaker in recent months. A greater negative balance demonstrates a worse backdrop.
Source: Bloomberg, Artorius
This chimes with the Senior Loan Officer survey that highlighted in January the sharp reduction in credit availability and the tightening of credit conditions. These tend to lead to slower economic growth, if not outright recessions.
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