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The new coronavirus has caused a major labor shortage in the job market.may be easing

A hiring sign is posted in front of a restaurant in Rehoboth Beach, Delaware, March 19, 2022.

Stephanie Reynolds | Afp | Getty Images

Labor shortages have plagued major economies since the outbreak of Covid-19, adding to inflationary pressures, but economists expect this trend to finally abate this year.

Central banks around the world have aggressively tightened monetary policy for more than a year to keep very high inflation in check, but labor markets by and large remain stubbornly tight.

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last week US employment statistics Despite the recent turmoil in the banking sector and a slowdown in the economy, it showed that this was still the case in April. Nonfarm payrolls increased by 253,000 in the month, while the unemployment rate is at its lowest level since 1969.

This tightening is reflected in many advanced economies, where core inflation remains stable and the Federal Reserve and European Central Bank and bank of england Interest rates can be suspended and eventually lowered.

in the United States, federal reserve Last week suggested a pause in rate hikes, but markets remain uncertain whether central banks will need to raise rates further in the light of upcoming data. March job openings plunged to the lowest level in almost two years

However, Moody’s last week predicted that the labor supply-demand gap across the advanced G-20 (group of 20) would narrow this year, suggesting that the tightening of financial conditions and the cyclical impact have lagged behind growth and labor growth. We expected market tightening to ease. Demand for workers will recede.

In mid-2022, as bottlenecks and a recovery in demand eased, supply chain shortages resulting from the pandemic shifted to a surplus of goods and materials for retailers and manufacturers.

Fed Chairman Jerome Powell: Cooling labor market shows chances of avoiding recession

Jeffrey Kleintop, chief global investment strategist at Charles Schwab, expects a similar reversal in the labor market in the second half of 2023 if the delayed effects of monetary tightening take hold.

“Company communications regarding earnings reports and shareholder presentations should include phrases such as “headcount reductions,” “layoffs,” “headcount reductions,” “employee layoffs,” ) are showing an increasing trend. ) references to labor shortages (including phrases such as “labor shortage,” “unable to hire,” “difficulty in hiring,” “struggling to fill positions,” “driver shortage”) It’s on the decline,” Kleintop stressed. in Friday’s report.

Since the beginning of the year, phrases related to job cuts have begun to outstrip phrases related to labor shortages in U.S. corporate earnings for the first time since mid-2021, according to data compiled by Charles Schwab.

“From Deficiency to Excess”

Kleintop also cited tighter lending terms as a factor in the worsening employment outlook, pointing to “a clear and intuitive precedent relationship between bank lending standards and employment growth.”

“The magnitude of recent tightening of lending standards by US and European banks signals a shift from increasing to decreasing employment in the coming quarters,” he said.

Moody’s said on Friday that higher borrowing costs for businesses and households will reduce employment intensity, consumer spending and economic activity throughout the year.

“A gradual increase in labor supply will ease the shortage due to higher participation rates among the younger working class and reduced pandemic-related frictions,” Moody’s strategists said.

“Labour force participation rates for the under-65 age group have returned to (or even surpassed) pre-pandemic levels in most G20 AE (developed countries). We have successfully brought workers back into the workforce. “

Job openings in March fell to 9.59 million

Rising service sector employment has been a key factor behind the resilience of the labor market in the face of the global economic downturn over the past year, as a result of the post-pandemic surge in demand.

Charles Schwab’s Kleintop highlighted that the gap between recession-hit services and manufacturing PMIs (Purchasing Managers’ Index) is at its largest ever.

“The record gap between service sector growth and manufacturing weakness suggests an imbalance that needs to be rebalanced,” he said.

“If the belated effects of bank tightening start to have a greater impact, it could be a strength in the services economy and thus employment.”

This job market weakness could help central banks, which have long voiced concerns about tight labor markets and the possibility of higher wages, to entrench inflation in their respective economies.

It could allow policymakers to adopt a more dovish stance, Kleintop suggests, which would boost stocks.

“However, the shift from shortage to surplus in the labor market may not be fast enough to significantly reduce core inflation by the end of the year, allowing central banks to freely declare victory over inflationary drivers and begin aggressive rate cuts. I can’t,” he added.

risk of resurfacing

Moody’s strategists agreed that labor shortages in the developed world will subside this year, but the workforce continues to shrink due to an aging population, prompting significant pressure to increase workforce size and productivity. Moody’s strategists suggested it could resurface without meaningful policy action.

The rating agency said aging populations would lead to a sharp decline in the available labor supply in most developed countries, with South Korea, Germany and the United States particularly affected.

Moody’s believes the future drag will be “significant” based on estimates of lost labor supply due to aging populations since the Covid pandemic.

U.S. economic conditions to be 'much weaker', rate cuts likely, strategists say

In the U.S., Moody’s estimates that nearly 70% of the 0.8 percentage point decline in the labor force participation rate from the fourth quarter of 2019 to date is due to aging, with an aging population costing about 1.4 million workers. represents.

“This ‘demographic drag’ on participation rates was most pronounced in the eurozone, Germany and Canada. However, idiosyncratic factors and policy actions in France, Australia, South Korea, the eurozone and Japan We were able to offset the drag on the market,” said a Moody’s strategist.

Offsetting factors they identified through data since the turn of the century included women’s labor force participation, migration, and advances in technology and training.

“As a result, policies that encourage immigration, female labor force participation, or the adoption of new productivity-enhancing technologies will determine the extent and persistence of the labor supply challenge. It is expected to reappear in the next business cycle,” Moody’s strategists argued.

Summarize this content to 100 words A hiring sign is posted in front of a restaurant in Rehoboth Beach, Delaware, March 19, 2022.Stephanie Reynolds | Afp | Getty ImagesLabor shortages have plagued major economies since the outbreak of Covid-19, adding to inflationary pressures, but economists expect this trend to finally abate this year.Central banks around the world have aggressively tightened monetary policy for more than a year to keep very high inflation in check, but labor markets by and large remain stubbornly tight.Related investment newslast week US employment statistics Despite the recent turmoil in the banking sector and a slowdown in the economy, it showed that this was still the case in April. Nonfarm payrolls increased by 253,000 in the month, while the unemployment rate is at its lowest level since 1969.This tightening is reflected in many advanced economies, where core inflation remains stable and the Federal Reserve and European Central Bank and bank of england Interest rates can be suspended and eventually lowered.in the United States, federal reserve Last week suggested a pause in rate hikes, but markets remain uncertain whether central banks will need to raise rates further in the light of upcoming data. March job openings plunged to the lowest level in almost two yearsHowever, Moody’s last week predicted that the labor supply-demand gap across the advanced G-20 (group of 20) would narrow this year, suggesting that the tightening of financial conditions and the cyclical impact have lagged behind growth and labor growth. We expected market tightening to ease. Demand for workers will recede.In mid-2022, as bottlenecks and a recovery in demand eased, supply chain shortages resulting from the pandemic shifted to a surplus of goods and materials for retailers and manufacturers.Jeffrey Kleintop, chief global investment strategist at Charles Schwab, expects a similar reversal in the labor market in the second half of 2023 if the delayed effects of monetary tightening take hold.“Company communications regarding earnings reports and shareholder presentations should include phrases such as “headcount reductions,” “layoffs,” “headcount reductions,” “employee layoffs,” ) are showing an increasing trend. ) references to labor shortages (including phrases such as “labor shortage,” “unable to hire,” “difficulty in hiring,” “struggling to fill positions,” “driver shortage”) It’s on the decline,” Kleintop stressed. in Friday’s report.Since the beginning of the year, phrases related to job cuts have begun to outstrip phrases related to labor shortages in U.S. corporate earnings for the first time since mid-2021, according to data compiled by Charles Schwab.”From Deficiency to Excess”Kleintop also cited tighter lending terms as a factor in the worsening employment outlook, pointing to “a clear and intuitive precedent relationship between bank lending standards and employment growth.””The magnitude of recent tightening of lending standards by US and European banks signals a shift from increasing to decreasing employment in the coming quarters,” he said.Moody’s said on Friday that higher borrowing costs for businesses and households will reduce employment intensity, consumer spending and economic activity throughout the year.”A gradual increase in labor supply will ease the shortage due to higher participation rates among the younger working class and reduced pandemic-related frictions,” Moody’s strategists said.“Labour force participation rates for the under-65 age group have returned to (or even surpassed) pre-pandemic levels in most G20 AE (developed countries). We have successfully brought workers back into the workforce. “Rising service sector employment has been a key factor behind the resilience of the labor market in the face of the global economic downturn over the past year, as a result of the post-pandemic surge in demand.Charles Schwab’s Kleintop highlighted that the gap between recession-hit services and manufacturing PMIs (Purchasing Managers’ Index) is at its largest ever.”The record gap between service sector growth and manufacturing weakness suggests an imbalance that needs to be rebalanced,” he said.”If the belated effects of bank tightening start to have a greater impact, it could be a strength in the services economy and thus employment.”This job market weakness could help central banks, which have long voiced concerns about tight labor markets and the possibility of higher wages, to entrench inflation in their respective economies.It could allow policymakers to adopt a more dovish stance, Kleintop suggests, which would boost stocks.“However, the shift from shortage to surplus in the labor market may not be fast enough to significantly reduce core inflation by the end of the year, allowing central banks to freely declare victory over inflationary drivers and begin aggressive rate cuts. I can’t,” he added.risk of resurfacingMoody’s strategists agreed that labor shortages in the developed world will subside this year, but the workforce continues to shrink due to an aging population, prompting significant pressure to increase workforce size and productivity. Moody’s strategists suggested it could resurface without meaningful policy action.The rating agency said aging populations would lead to a sharp decline in the available labor supply in most developed countries, with South Korea, Germany and the United States particularly affected.Moody’s believes the future drag will be “significant” based on estimates of lost labor supply due to aging populations since the Covid pandemic.In the U.S., Moody’s estimates that nearly 70% of the 0.8 percentage point decline in the labor force participation rate from the fourth quarter of 2019 to date is due to aging, with an aging population costing about 1.4 million workers. represents.“This ‘demographic drag’ on participation rates was most pronounced in the eurozone, Germany and Canada. However, idiosyncratic factors and policy actions in France, Australia, South Korea, the eurozone and Japan We were able to offset the drag on the market,” said a Moody’s strategist.Offsetting factors they identified through data since the turn of the century included women’s labor force participation, migration, and advances in technology and training.“As a result, policies that encourage immigration, female labor force participation, or the adoption of new productivity-enhancing technologies will determine the extent and persistence of the labor supply challenge. It is expected to reappear in the next business cycle,” Moody’s strategists argued.
https://www.cnbc.com/2023/05/11/covid-caused-huge-shortages-in-the-jobs-market-it-may-be-easing.html The new coronavirus has caused a major labor shortage in the job market.may be easing

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