Job Offers Slowed in January But Wages Rose

Layoffs seen in some white collar industries are part of a pull-back from pandemic era hiring, research institute ADP's chief economist Nela Richardson said on Wednesday, as employers continued to hire, but at a slower pace in January.

Companies added 107,000 jobs to start the year, fueled by hiring in construction and trade, transportation and utilities sectors. Those industries contributed close to half of the hiring that happened in January, ADP data showed.

But the information showed financial activities and professional services were flat for the month, echoing some recent headlines of layoffs in those sectors, suggesting that hiring is slowing in certain white collars jobs.

This was part of a shift happening within these sectors that suggests that the hiring on potential of what the economy would look like post-COVID may have been in error, Richardson told reporters during a press conference attended by Newsweek.

"Our forecast of where the economy moves is subject to error and I think what we're seeing with the big headlines at the top of the year is an understanding that maybe companies who were in that space, who hired on potential, are now kind of restructuring those hiring activities to fit where the economy is now," she said.

There was a rebound in manufacturing of 2,000 new jobs, an interest-sensitive sector, that has been in the midst of a recession in a business environment that has seen the Federal Reserve hike interest rate to two-decade highs that have pushed up borrowing costs across the economy.

Wages accelerated at a slower pace for workers, at 5.2 percent compared to 5.4 percent the previous month. For job changers, pay growth went up by 7.2 percent, in what was the smallest increase since May 2021.

"You're seeing solid pay growth, not supercharged like we saw before," Richardson said. "We think that's fairly solid, which means real wages are improving."

The January job numbers point to an economy that is slowing but still hiring and paying workers decent wages as inflation, which had hit historic highs, was cooling. This suggests that the Federal Reserve is close to achieving a soft landing, a scenario where their hiking of rates manages to bring down inflation without damaging the economy or leading to massive layoffs.

Richardson suggested that the U.S. economy has hit that milestone, as wage pressures on inflation are easing and hiring continues but at a slower pace.

"This economy has softly landed and is relaxing at its destination, with two things happening—slowdown in hiring, but still solid, and wage pressures [are] easing, which also helps the case to keeping inflation under control," she told reporters.

Update 1/31/24, 10.30 a.m. ET: This article was updated throughout with additional information, fresh comments from Richardson and context.