The US economy added 187,000 new jobs in August, beating analysts’ expectations. But the report also contained several signs that the labour market is cooling: the unemployment rate increased from 3.5% to 3.8%, wage growth fell, and the three-month, six-month and twelve-month moving averages for monthly job growth all declined. Temporary help services, an indicator which measures the number of workers on short-term contracts, also points to a slowdown, and has now fallen in nine out of the last ten months. Although this indicator gets less attention than others, it can be a useful leading indicator of economic activity. Indeed, it has fallen before each of the last three US recessions. In Fathom’s Global Outlook, Autumn 2023,[1] our central scenario sees the US economy slowing through next year, but avoiding recession – just. The recent decline in temporary help services appears to confirm a slowdown in the labour market, which, in the context of the other labour market data released on Friday, makes the 9-basis-point rise in the US 10-year Treasury yield that day even more surprising.
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[1] Charts and analysis from Fathom’s Global Outlook, Autumn 2023 will be available via Chartbook to users of Refinitiv Datastream, an LSEG business.
