Data released by a number of U.S. local Feds show that the U.S. job market will cool further in 2024, wage growth is expected to slow down, and inflationary pressures will be reduced, adding to the market's expectations for the Fed's soaring interest rate cuts next year.
Two Dallas Fed surveys showed that about 30 percent of Texas companies said their staffing levels were in "ideal" condition, up about 7 percentage points from the beginning of the year. About 15 percent of respondents said they had a surplus of employees but no layoffs, double the number in January. Texas manufacturing companies are expected to see their employment rise at their lowest level since March 2020, while service sector companies are also expected to hover near their lowest level in more than three years.
Data from the New York Fed showed that the expected employment rate increase for manufacturing companies in the jurisdiction was the lowest since March 2017, and the expected employment rate for service companies was the second-lowest in three years.
The Richmond Fed's factory employment expectations fell in December, hitting their lowest since May 2020, while services sector employment expectations improved.
The Dallas Fed said annual wage growth was 7% in 2021 and even higher in 2022, while it will slow to 4 next year3%。The Kansas Fed report also showed that wage expectations in the jurisdiction have fallen to a three-year low.
While some companies still report a shortage of skilled workers with experienced skills, the survey results suggest that the supply-demand balance of labor is improving.
Next Friday, the US will release non-farm payrolls, and the market is now expecting employment to increase by 170,000 in December. At the same time, economists believe that non-farm payrolls will fall sharply next year, with an average monthly increase of 80,000 in the first quarter, about half of the average for the current quarter.
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