The job market cooled more than analysts expected in July, according to the Bureau of Labor Statistics’ (BLS) latest jobs report. Unemployment continued to tick upward, hitting a three-year high, while the number of jobs added fell from June. Let’s take a closer look.
Diving into the data. The unemployment rate jumped up to 4.3% in July, up from 4.1% in June. July’s jobless rate marks the highest number of unemployment claims since October 2021, when it was 4.5%. Employers added 114,000 total jobs last month, down from the revised estimate of 179,000 jobs that were added in June. By comparison, economists forecast that businesses would add 175,000 jobs and unemployment would remain unchanged at 4.1%, per CNN.
While the latest jobs report has renewed concerns of a possible recession and further boosted expectations that the Federal Reserve Bank will cut interest rates in September, recruiting experts say what the data could mean for HR leaders varies by industry.
“It’s very important to look at the different segments of the labor market. Different companies hire very different groups of workers,” Julia Pollak, ZipRecruiter’s chief economist, told HR Brew.
Zoom out. Most companies can be split into two groups right now, according to Pollak. The first is cyclical industries, like restaurants and hospitality, where a declining labor market may be bad news for companies’ top line, and HR leaders will likely have to consider cost-cutting measures like temporary layoffs or reduced hourly schedules. The second is more recession-proof sectors, like healthcare, utilities, and freight and logistics, where business is less impacted by consumer spending and may even be growing. Companies in the latter should be aggressive in their recruiting right now.
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In that vein, the healthcare industry saw the biggest gains in July, adding 55,000 jobs, followed by construction, and transportation and warehousing. Meanwhile, the information sector lost 20,000 jobs. Most other industries changed little between June and July.
While companies may be waiting for interest rates to fall and cash to loosen up before hiring again, Pollak warned that those who are in a position to hire now should do so before other companies start ramping up recruiting.
“This is a good time to snap up,” Pollak said. “There have been lots of announcements of major layoffs, from companies that have strong workers with solid skills and high wages. Those people are going to be highly motivated to find new jobs.”
Moreover, workers are craving job stability right now, and while some resilient industries like food and beverage, construction, and utilities may not seem as exciting, their resilience in economic downturns could be enticing to workers, Kyle Samuels, a talent acquisition expert and founder and CEO of executive search firm Creative Talent Endeavors, told HR Brew.
“I always tell [clients] to think about, if you lose your job, what are the things that you would not get rid of? In terms of stability standpoint, that’s where you should go,” he says. “[They’re] not the sexiest, most innovative, but they’re stable.”