“Downside risks to payrolls remain, largely due to government layoffs and firms delaying hiring,” Williamson said. “Some firms are reportedly preparing for layoffs, but announcements remain scarce. Meanwhile, lagging indicators, such as the February Job Openings and Labor Turnover Survey, show a steady weakening of demand for labor, with fewer vacancies and the lowest hiring rate in roughly a decade outside the pandemic, though employers remain reluctant to cut jobs.”
Mike Fratantoni, senior vice president and chief economist with the Mortgage Bankers Association, agrees that tariff-impacted sectors could see job cuts in the future.
“In April, job gains were concentrated in just a few sectors, including health care and transportation and warehousing,” Fratantoni said. “We expect that transportation and warehousing jobs are at risk as the tariff effects kick in. Federal government employment decreased by 9,000 in April and is down 26,000 so far this year. Given the plans for further reductions, it is likely that this category will also shrink in the months ahead.”
Fratantoni also notes that even though the unemployment rate held steady in April, the duration of unemployment increased, and, with fewer job openings, it is harder to find another job once unemployed.
“While the unemployment rate has not increased in recent months, there continues to be increases in the duration of unemployment spells,” Fratantoni said. “Given the declining number of job openings and the slow pace of hiring, for those who lose a job, it is getting tougher to find a new one.”
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