As of today, there are two job openings per employable person in USA and UK. And these are the very same countries that are dealing with high inflation along with a risk of recession in coming quarters. This does make many people question, why is there such a hiring momentum when such a risk is present.
The answer cannot be more simple, the opening or vacancies are in an industry that has recently seen a recovery from the Covid-related downturn such as aviation and tourism. This also is a result of labor dynamics, since covid many people changed the industry of work as they gave priority to work from home than anything else.
But this is a sign of what has happened In the past or present. Ok here are several headlines that point toward the future. The largest beneficiary of Covid-driven changes were tech, financial services, and restaurants. But now when there is a clear indication of the peak in growth and tough times ahead these are the first ones to announce job cuts.
Apple has already terminated 100 contractors and Meta also indicated restructuring due to macro changes. Yesterday, Goldman Sachs has indicated a large layoff starting next week. Even many restaurant chains in UK and Europe are planning to downsize or shut operations as power prices make it difficult to operate.
Though unemployment is decades low in many countries this would be changing quickly. Already in the USA, the unemployment rate is rising to 3.7% a small but important increase.
All these factors will lead to weakness in employment post-festival season as demand is already lacking. And it would also reduce the chances of a soft landing as expected by central banks.