Companies Hang On To Workers --- Layoffs are low despite economic hurdles.

"Everybody knows the U.S. economy faces significant headwinds in the fourth quarter. That includes employers, though they are still showing little inclination to batten down the hatches.

On Tuesday, the Labor Department reported that there were a seasonally adjusted 9.6 million job openings at the end of August, up from July's 8.9 million. With that, the number of job openings per person counted as unemployed remained around 1.5. That compares with an average of about 1.2 in the prepandemic year of 2019.

Other aspects of the report smacked of a job market that, while cooling, is still quite strong. The number of hires continued to outpace the number of people leaving. The number of people quitting their jobs is still historically high, suggesting that workers continue to find new, and better, employment opportunities. Layoffs are higher than a year ago, but still below levels before the pandemic.

All of which jibes with other recent indicators. Weekly jobless claims, for example, remain quite low, while an index of U.S. job openings from job-listing site Indeed remains high. Cooling inflation might make the Federal Reserve less inclined to raise rates again, but a strong job market won't provide reason to cut. And this is all occurring even though employers have been given plenty of cause to worry. Continuing strikes, particularly at Detroit automakers, are likely to hit growth. The resumption of student-debt payments will be cutting into consumers' buying power, as will high gasoline prices. A government shutdown remains a risk. High interest rates are a burden.

So, if employers were looking for excuses to pause hiring, or to trim their workforce, there are plenty on hand. Yet they aren't doing either. This is probably a reflection of an environment where many businesses are still short-staffed. But it also reflects an environment where the risk of a recession appears more remote than it did even a few months ago, and where employers worry that employees they lay off now will be hard to replace later.

Last week, Duke University, with the Federal Reserve Banks of Atlanta and Richmond, reported that chief financial officers surveyed in late August through early September put the chances of gross domestic product contracting over the next 12 months at 18.9%, down from 24.5% in the second quarter, and the lowest level since the first quarter of 2022. The CFOs also expected, on average, that employment at their companies would grow by 3.9% next year, compared with 1.1% this year. Expecting that you will need to add employees next year is a strong reason not to fire any now.

Investors need to be attentive to hurdles that the economy is facing this quarter, but they should also think about what would happen if the economy manages to clear all of them without stumbling badly. A job market that is this strong could stay strong next year." [1]

1. Companies Hang On To Workers --- Layoffs are low despite economic hurdles. Lahart, Justin.  Wall Street Journal, Eastern edition; New York, N.Y.. 04 Oct 2023: B.12.