Bloomberg News reports that labor markets that are being regarded as robust are defying efforts of the central bank to clamp down on inflation and economists’ predictions that recession is impending and is knocking at the door.
Although the job market is strong and good for the workers, it is not good for inflation. Thereby signaling to the central banks of the world, which are on a rate-increasing spree at an aggressive rate, that they cannot ease up.
With the surging cost of borrowing and a slowdown in growth, the unemployment rates are not increasing. Instead of the same, companies across the developed nations have been complaining about a shortfall of workers. A constant mismatch between demand for new recruitment and supply of workforce is found to be supporting wages and offering a shield to the consumers from slowdowns when the central banks require a fading demand for cooling down inflation.
As of September, the rate of employment across the service providers and the manufacturers across the globe had surged every month for the past two years, per JPMorgan Chase & Co, a gauge provided by S&P Global. And the OECD revealed that unemployment in as many as 38 member countries reached 4.9% in August, and the rate was way below or equal to the levels before the pandemic in as many as 80% of the nations.
Unemployment Across the Globe in 2023
In the United States, the unemployment rate is presently at 3.5%, matching a 50-year low. For the workers, the employer demand is strong, and despite labor force participation continuing to remain at the pre-pandemic levels, with 1.7 employment vacancies for each unemployed American.
Expansion is Weaker
The International Monetary Fund’s growth outlook was found sharply cut since the beginning of 2022. Currently, the layoffs are at historically lower levels; however, the leading brands in global commerce are sending signals of an impending slowdown.
Meta Platforms Inc, the Facebook and Instagram owner, revealed that it is planning to freeze recruitment and restructure some teams to cut and shift priorities. Goldman Sachs Group Inc is embarking upon the largest round of job cuts since the beginning of the pandemic. Yet, employers have continued hiring, wages are surging, and layoffs have remained scarce.
As far as unemployment insurance applications in the United States is concerned, they are at historically low levels. Almost 50% of the business entities are reporting that they are not being able to fill up the positions.
It is believed that rising inflation will be hammering the wage increase for the second consecutive year, spilling over in 2023, as per a survey by ECA International, a workforce consultancy service provider. It is anticipated that only 37% of the nations across the globe are anticipated to report a hike in wages that will be able to keep pace with inflation.
