Economics

Job Growth Continues, but 2023 Outlook Dims (Report Preview)

The U.S. labor market remains strong moving into the new year, but the outlook for 2023 is less bright

Graphic conveying U.S. labor market and employment trends in January 2023
Getty Images / Morning Consult artwork by Ashley Berry
  • The labor market remains tight, with Morning Consult’s Lost Pay and Income tracker near series lows after falling over the course of December. 

  • Job search activity among employed U.S. adults remains elevated as optimistic workers continue to like their chances of gaining higher pay in the current job market.

  • More challenging operating conditions are leading small- and medium-sized businesses to pull back on hiring, a likely bellwether for job growth moving into 2023. 

This memo offers a preview of Morning Consult’s January U.S. Jobs & Labor Report. Morning Consult Economic Intelligence subscribers can access the full report here.

Morning Consult’s labor market data is not flashing red, but it is no longer flashing green either as the incidence of lost pay and job loss expectations edge higher. Job growth has slowed but companies are still hiring on net, and job vacancies continue to outnumber those looking for work. Critically, nominal wage growth remains strong as businesses continue to compete to attract and retain workers. While this is positive for workers, it is a worrying sign for policymakers at the Federal Reserve who view the current pace of wage growth as inconsistent with inflation targets. 

Continued tightness in the labor market may lead to even more tightening in the new year. As companies face higher borrowing costs and dampening demand for their goods, they will start to pull back — and data from Morning Consult’s Small- and Medium-Sized Business Survey indicates this is already happening. 

Economic Intelligence: Featured Chart
Hiring Plans Among SMBs Were on the Decline Headed Into 2023

Thinking about your business and employees currently, which of the following are you planning on doing over the next three months?

Stacked bar chart of small- and medium-sized business owners and decision-makers' plans regarding the number of employees at their business, showing plans to reduce the pace of hiring.

Source: Morning Consult’s SMB Survey. The current study surveyed 507 small- and medium-sized business owners and decision-makers from Nov. 1-Nov. 4, 2022. The margin of error for the overall survey is +/- 4%.

According to Morning Consult’s Small- and Medium-Sized Business Survey, SMBs are already facing challenging operating conditions in Q4 2022 and are increasingly planning to pull back on investment moving into 2023. This includes reducing the pace of hiring and reining in hiring plans for 2023. However, most companies are still adding to headcounts, despite reducing spending on other investments, signaling businesses’ reluctance to let go of workers in the wake of a historically tight labor market and widespread staffing shortages. How SMBs behave may well prove to be a bellwether for the broader labor market in 2023.

This memo offers a preview of Morning Consult’s January U.S. Jobs & Labor Report. Morning Consult Economic Intelligence subscribers can access the full report here.

About this report

Morning Consult’s monthly U.S. Jobs & Labor Report provides a detailed assessment of the current state of the U.S. labor market, featuring proprietary data that provides enhanced scale, frequency and depth to official data sets.

Businesses and investors rely on this report to identify emerging labor trends and better understand how to attract, hire and retain talent.

The report draws on Morning Consult Economic Intelligence, a high-frequency global economic data set reflecting more than 17,000 daily economic surveys across the 43 largest global economies.

Full methodology and average daily sample sizes per country can be found here.