Business survey suggests US labor market may have peaked

There is an even balance in the share of U.S. businesses reporting decreases and increases in employment for the first time in a decade, a survey showed on Monday, the latest suggestion that the labor market has likely peaked and job growth could slow this year.

The findings of the National Association for Business Economics’ (NABE) fourth-quarter business conditions survey followed on the heels of a government report this month showing job openings falling by the most in more than four years in November.

“For the first time in a decade, there are as many respondents reporting decreases as increases in employment at their firms than in the previous three months,” said NABE Business Conditions Survey Chair Megan Greene.

“However, this may have been due to difficulty finding workers rather than a pullback in demand.”

The survey is based on the responses of 97 NABE members on business conditions in their companies or industries. It was conducted between Dec. 23 and Jan 8. and reflects conditions in the fourth quarter and the near-term outlook.

According to the survey, the declines in employment were in the services, goods-producing and transportation, utilities, information, and communications industries. There were gains in employment in the finance, insurance, and real estate sectors.

Though job growth remains solid and more than enough to keep the unemployment rate low, momentum has slowed from the brisk pace experienced at the end of 2018 and the beginning of 2019.

The government last August estimated that the economy created 501,000 fewer jobs in the 12 months through March 2019 than previously reported, the biggest downward revision in the level of employment in a decade.

That suggests job growth over that period averaged around 170,000 per month instead of 210,000. Economists expect job gains beyond March 2019 could also be revised lower.

The slowdown in employment gains has been blamed on worker shortages and trade tensions, especially the U.S-China trade war. The NABE survey showed a significant increase in the percentage of companies reporting shortages of unskilled labor, while nearly half reported shortages of skilled workers.

“While most respondents suggest their firms have not felt much impact from the tariffs and countermeasures over the past year, respondents from goods-producing firms report their companies have experienced negative sales and higher costs,” said Greene, who is also a senior fellow at the Harvard University’s Kennedy School of government.

The survey also offered some clues on why wages have not increased significantly despite worker shortages. Forty-seven percent of respondents reported raising wages, while 44% said they were training internal staff for promotion. Businesses were also investing in labor-saving processes, with the share of respondents citing this measure rising to 36% in January from 34% in October and 22% in January 2019.

Overall, businesses were more upbeat about the economy over the next 12 months than in October, with 30% of respondents expecting the economy to grow between 2.1% and 3.0% this year. That compared with a share of 20% in October.