The US labor market has shown remarkable resilience, even in the wake of large-scale federal layoffs, tighter immigration policy, and growing economic uncertainty. This unexpected strength has been one factor keeping further Federal Reserve (Fed) rate cuts on hold. However, regional Fed surveys are flashing early warning signs for the US labor market. Forward-looking employment indicators from key districts—including New York, Philadelphia, and Richmond—have turned negative, with firms signaling reduced hiring plans in the months ahead. The Philadelphia Fed’s future employment index just hit its lowest level since 2016, and similar softness is showing up in other manufacturing-heavy regions. While not yet a broad downturn, the shift suggests growing caution among employers and could mark the start of a cooling trend in job growth.
Kevin O'Neil
Associate Portfolio Manager & Senior Research Analyst
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