Friday, the job report that published an amazing awakening to Wall Street also contained a signal of recession and more indications than AI weighs on employment.
The payroll increased by 73,000 people last month, well below the forecasts of around 100,000. Meanwhile, the May’s count was reduced from 144,000 to 19,000, and the total of June was reduced from 147,000 to only 14,000, which means that the average gain in the last three months is now only 35,000.
Admittedly, low job figures do not mean that there are mass layoffs. Other sets of data such as weekly unemployment complaints and monthly surveys on the back work. At the same time, wages and weeks of work always increase.
“But the comfort obtained of this news is dominated by a slowdown in net hiring by sending a dropout speed alert,” a note wrote on Friday.
In particular, hiring in the private sector has slowed down to an average of only 52,000 in the last three months, sectors outside of health and stagnant education.
Coupled with the absence of signs that undesirable separations increase due to immigration policy, it is a strong signal that the commercial demand for work has cooled, they explained.
“We have constantly pointed out that a slide from the demand for labor of this magnitude is a recession alert signal,” added JPMorgan. “Companies normally maintain hiring gains thanks to growth downgrades which they perceive as transitional. In the episodes where the workforce slides with growth feedback, it is often a precursor of warming. ”
For the moment, global economic figures are still showing an expansion, although a slower pace. The GDP has rebounded more robustly than expected in the second quarter, reaching 3%, although a measure which eliminates the impact of foreign trade and rather examines the final domestic demand indicated the slowdown. And for the third trimester, the Atlanta Fed’s GDP Tracker Highlights growth growth at 2.1%.
JPMorgan has also warned that the depressed rate of employment growth is unlikely to maintain income gains or consumer confidence, which has rebounded in recent months.
Meanwhile, the wider U -6 gauge of unemployment – who includes people who have not looked for work recently but who are always interested in finding a job as well as people who work involuntarily part -time and who prefer a full -time role – have climbed 0.4 percentage points this year.
On the other hand, the reigning unemployment rate has barely changed, bouncing in a tight range between 4% and 4.2% for more than a year.
Until Friday shock, it helped give the impression that the labor market was resilient in front of President Donald Trump’s steep price hikes.
“We think that job creation is no longer described in a solid way,” said JPMorgan. “With the construction of trading in the trade war, the news of this week support our opinion according to which the Fed is getting closer to relaxation.”
A distinct note from JPMorgan also highlighted more details buried in the job report which suggests that AI has an impact on the labor market.
For example, salary companies in professional and business services were lower and fell 14,000 last month.
In addition, the unemployment rate of workers educated at university increased to 2.7% against 2.5%, while the overall unemployment rate increased to 4.2% against 4.1%.
“The new entrants seem to have taken into account an unusually significant part of the increase in the unemployed last month,” said JPMorgan.
This follows previous alarms on the use of AI reducing the need for entry -level jobs, a critical springboard for recent university graduates who seek to launch their careers.
But last month, the best economist Brad Delong argued in a recent test That the challenges faced by young job seekers today are mainly motivated by generalized political uncertainty and a slow economy – not by the rapid rise in AI tools.
Uncertainty leads companies to delay major decisions, including hiring, faced with an unpredictable political environment, which was whipped by Trump’s Trump’s trade war.
“This risk aversion is particularly damaging for those who at the start of their career, who count on a constant flow of entry-level openings to get a foot in the door,” he wrote.
