Survey suggests job market conditions starting to soften

A new survey of business economists suggests U.S. job market conditions are beginning to soften, with firms indicating an easing of labor shortages and a pullback in hiring expectations.

About one-third of respondents in a National Association for Business Economics survey said their firms are not facing a labor shortage, and nearly 20% of them expected employment to fall at their companies in the coming months.

“For the first time since 2020, more respondents expect falling, rather than increased, employment at their firms in the next three months,” association President Julia Coronado, founder and president of MacroPolicy Perspectives LLC, said in a statement. “Fewer respondents than in recent years expect their firms’ capital spending to increase in the same period.”

Only 12% of those surveyed think head counts will rise in the next three months — less than half the share that said their companies had increased employment over the past three months. The survey of 60 National Association for Business Economics members was conducted Jan. 4-11.

The figures highlight concerns that more companies will begin to shed workers as the impact of higher interest rates by central banks worldwide work through the broader economy.

Corporate profit margins are already coming under pressure. Some 40% of respondents in the survey said their companies’ margins have declined over the past three months, up from less than 30% in the July and October surveys.

That said, the respondents were slightly more optimistic about future profits, with more than 50% expecting margins to remain unchanged in the next three months, with a smaller share expecting them to decline.