24/7 Wall St. Insights

• The New York Federal Reserve has affirmed the view that the labor market has weakened.
• It may not set off alarm bells yet, but it is cause for concern.
• Also: Dividend legends to hold forever.

After two years during which the Bureau of Labor Statistics (BLS) showed unemployment below 4%, the jobless rate rose to 4.3% in July. Some economists viewed this as the start of a weak labor market. Data from the New York Federal Reserve affirmed that view.

The July 2024 SCE Labor Market Survey showed employment data was softening: “The proportion of individuals who reported searching for a job in the past four weeks rose to 28.4 percent from 19.4 percent in July 2023, marking the highest reading since March 2014.” There are two ways to read this. Either people believe they can find better jobs, or they worry their current employment is threatened. It is the second of these, unemployment may rise soon, because people see themselves as possible targets.

People who were satisfied with the chance they could get a promotion dropped 9.3 percentage points to 44.2%, which is a significant move. Once again, if the jobs market was robust, more people would be likely to think their employers would give them better advancement opportunities.

There is a temptation to read too much into a single set of numbers. However, CNBC points out that “Those who expected to become unemployed rose to 4.4%, a 0.5 percentage point increase from a year ago and the highest in the survey’s history.” That, by itself, would seem to be a warning.

Unemployment has not risen enough to set off alarm bells. However, if the BLS’s August unemployment rate rises to 4.5%, there will be reason for real anxiety.

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