WEBVTT - US Hiring Comes Up Short in Possible Warning Sign for Fed 0:00:00.600 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week Inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.680 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:27.160 --> 0:00:30.800 US hiring falling short of forecast in August downward revisions 0:00:30.840 --> 0:00:33.480 to the prior two months, a development likely to fuel 0:00:33.520 --> 0:00:36.560 ongoing debate over how much the FED should cut interest rates. 0:00:36.600 --> 0:00:39.120 Here are the numbers, non farm payrolls rising by one 0:00:39.200 --> 0:00:42.200 hundred and forty two thousand last month. The three month 0:00:42.240 --> 0:00:44.880 average is at the lowest since mid twenty twenty. The 0:00:44.960 --> 0:00:47.920 unemployment rate, though edged down to two down to four 0:00:47.920 --> 0:00:50.400 point two percent. It's the first decline in five months, 0:00:50.400 --> 0:00:54.360 reflecting reversal in temporary layoffs. In remarks after the release 0:00:54.360 --> 0:00:56.640 of the jobs numbers, FED Governor Chris Waller said the 0:00:56.720 --> 0:01:00.280 latest batchup data quote requires action, adding that he would 0:01:00.280 --> 0:01:03.800 advocate for front loading rate cuts if that is appropriate. 0:01:04.160 --> 0:01:06.000 We got a great roundtable on what you need to 0:01:06.000 --> 0:01:08.120 know about the latest data and what it means for 0:01:08.160 --> 0:01:10.240 the FED and the economy. We got with us in 0:01:10.280 --> 0:01:13.440 the Bloomberg Studio, Michael McKee's Bloomberg News International Economics and 0:01:13.480 --> 0:01:17.840 Policy correspondent. Also Sophia Carney Letterman, senior economists for FAHN. 0:01:17.920 --> 0:01:20.760 She joins us from New York. Mikes, you reminded us 0:01:20.840 --> 0:01:23.399 yesterday this was the most important payrolls report since the 0:01:23.480 --> 0:01:26.080 last payrolls report. It did come in shy of the 0:01:26.080 --> 0:01:29.320 media and forecast in that Bloomberg survey of forecasters. Does 0:01:29.360 --> 0:01:33.000 front loading rate cuts mean fifty basis points in September? 0:01:33.720 --> 0:01:35.440 I don't think so, okay. 0:01:35.560 --> 0:01:39.120 I think what Chris Waller was saying is that he's 0:01:39.280 --> 0:01:47.480 open to doing more in later meetings if the data 0:01:47.520 --> 0:01:48.680 come in that way. Because there's not a lot of 0:01:48.760 --> 0:01:52.160 data between now and September eighteenth that would convince you 0:01:52.200 --> 0:01:54.480 one way or another. So I think the Fed's default 0:01:54.520 --> 0:01:56.960 at twenty five basis points. The numbers came out today 0:01:58.280 --> 0:02:01.680 without giving you any reason to really move away from that, 0:02:02.160 --> 0:02:05.560 and so because we're not getting a strong signals of 0:02:05.640 --> 0:02:09.240 fifty at this point, I think that twenty five is 0:02:09.280 --> 0:02:11.000 probably the best guess. 0:02:11.320 --> 0:02:14.080 Sophia, let's bring you in here. What's your reaction to 0:02:14.080 --> 0:02:16.120 the jobs report and do you still think that the 0:02:16.120 --> 0:02:18.959 FED will only cut twenty five basis points. 0:02:20.520 --> 0:02:22.840 Yeah, thanks so much for having me. I got to 0:02:22.840 --> 0:02:25.160 totally agree. You know, we are still in the twenty 0:02:25.160 --> 0:02:28.240 five basis point camp. You know, that's sort of what 0:02:28.480 --> 0:02:30.560 the FED has been teeing up. And I think exactly 0:02:30.560 --> 0:02:33.680 what you heard from Waller this morning suggested that should 0:02:33.760 --> 0:02:36.280 subsequent data. That's the term that he used. He said, 0:02:36.280 --> 0:02:39.880 it's subsequent data, so it's increased weakness in the labor market. 0:02:39.919 --> 0:02:42.799 He'd be prepared to make a bigger cut. But to us, 0:02:42.800 --> 0:02:45.400 that suggests that that means future employment reports, if you 0:02:45.480 --> 0:02:49.440 see either further weakening, that that might encourage the FED 0:02:49.520 --> 0:02:52.000 to go more than twenty five. So we are looking 0:02:52.040 --> 0:02:54.040 at twenty five basis points at September. That's what we 0:02:54.080 --> 0:02:57.360 thought before this employment report today, and that's what we 0:02:57.400 --> 0:02:59.160 still think will expect to see in a couple of 0:02:59.200 --> 0:02:59.960 weeks from the Fed. 0:03:00.200 --> 0:03:03.280 Hey, Mike, help us understand the unemployment rate going down. 0:03:04.160 --> 0:03:07.600 What exactly does that reflect? This in the month of August. 0:03:08.000 --> 0:03:10.880 Well, it's sort of a payback for what we saw 0:03:10.919 --> 0:03:13.079 in July where it went up because a number of 0:03:13.120 --> 0:03:16.280 things reversed themselves. We had a much smaller rise in 0:03:16.440 --> 0:03:20.040 the labor force. We had more people hired than were 0:03:20.120 --> 0:03:24.680 let go. In the household survey, we also saw things 0:03:24.720 --> 0:03:27.880 like the number of people who were on temporary layoff, 0:03:27.960 --> 0:03:31.720 which had boomed in July and contributed to the rise 0:03:31.760 --> 0:03:32.720 of the unemployment rate. 0:03:32.919 --> 0:03:33.600 That fell back. 0:03:34.040 --> 0:03:37.200 So you'd say this was a decline for all the 0:03:37.280 --> 0:03:40.520 right reasons. And it's one reason that the Fed doesn't 0:03:40.760 --> 0:03:43.880 feel a sense of urgency about this, because it's not 0:03:43.960 --> 0:03:46.040 suggesting that all of a sudden, people are losing a 0:03:46.080 --> 0:03:46.680 lot of jobs. 0:03:46.720 --> 0:03:48.040 Companies are getting rid of people. 0:03:48.320 --> 0:03:50.360 This really tracks with what we saw in the Beige 0:03:50.360 --> 0:03:54.360 Book of companies aren't hiring, but they're not firing people either. 0:03:54.720 --> 0:03:57.040 So then, Mike, how do you square the reaction that 0:03:57.080 --> 0:04:00.320 we're seeing in the bond market with yields fallowing off 0:04:00.320 --> 0:04:04.840 Traders pricing in for that fifty basis point cut in September. 0:04:04.320 --> 0:04:06.680 Well, they're not really pricing fifty anymore. They've kind of 0:04:06.680 --> 0:04:08.960 moved it down back down to twenty five, because I 0:04:08.960 --> 0:04:11.560 think the reality is set in that the Fed is 0:04:11.600 --> 0:04:14.480 not setting us up for fifty, but we are seeing 0:04:14.520 --> 0:04:18.599 yields fall because basically, you've had confirmation not only in 0:04:18.640 --> 0:04:22.679 the numbers, but in what Waller and John Williams have said, 0:04:22.920 --> 0:04:25.240 joining the crowd of people who've said we're going to 0:04:25.279 --> 0:04:28.720 cut rates at the next meeting. So you're seeing that 0:04:28.800 --> 0:04:32.200 reaction there, and people are anticipating that the FED is 0:04:32.240 --> 0:04:38.159 going to be moving the short end lower and that's caused. 0:04:37.839 --> 0:04:39.280 The yield curve to uninvert. 0:04:39.640 --> 0:04:42.000 We'll see if it stays that way, but at this 0:04:42.040 --> 0:04:43.800 point it's kind of a natural reaction. 0:04:44.000 --> 0:04:45.760 I don't know why equities are. 0:04:45.600 --> 0:04:48.040 Doing what they're doing, but if I mean, you're the 0:04:48.120 --> 0:04:51.120 person who covers that, if. 0:04:50.320 --> 0:04:54.600 You can ever explain to me why, well, Fortunately Abigail 0:04:54.640 --> 0:04:56.279 Dolittle is coming in in just a few minutes and 0:04:56.279 --> 0:04:58.599 she's going to help explain the equity market reaction. So 0:04:58.600 --> 0:05:00.000 if yeah, I do want to go back to you 0:05:00.200 --> 0:05:02.599 to get an understanding of what type of data we 0:05:02.680 --> 0:05:05.719 could see maybe over the next few weeks to change 0:05:05.720 --> 0:05:08.480 your view that the FED well, actually, in less than 0:05:08.480 --> 0:05:10.600 two weeks could cut rates by more than twenty five 0:05:10.640 --> 0:05:12.560 basis points. What would you need to see? What would 0:05:12.600 --> 0:05:14.400 the FED need to see to convince them between now 0:05:14.400 --> 0:05:14.719 and then? 0:05:16.720 --> 0:05:19.320 You know, I don't think that there's really that much 0:05:19.440 --> 0:05:21.480 time and that much data that's going to come out 0:05:21.480 --> 0:05:24.480 in the next two weeks that really could necessarily push 0:05:24.520 --> 0:05:26.120 the needle. I mean, the really big thing would be 0:05:26.440 --> 0:05:30.200 next Wednesday CPI report, Right, I don't think that you're 0:05:30.200 --> 0:05:32.560 going to see anything really unexpected there. I think you're 0:05:32.560 --> 0:05:35.679 going to continue to see progress towards two percent inflation 0:05:35.760 --> 0:05:38.440 that we've been seeing, and so that I think won't 0:05:38.440 --> 0:05:40.520 be something that could push the needle. If there was 0:05:40.560 --> 0:05:44.480 an incredible upward surprise and inflation, maybe, but I don't 0:05:44.520 --> 0:05:47.039 think so, right. I think between now and the September 0:05:47.080 --> 0:05:50.360 eighteenth meeting, we kind of have the majority of the data, 0:05:50.440 --> 0:05:53.479 and then you also factor in the FED blackout period 0:05:53.560 --> 0:05:57.120 starts tonight, so we won't hear comments from any FED officials, 0:05:57.120 --> 0:06:00.279 and we've heard from the Howell FED for this whole 0:06:00.320 --> 0:06:03.640 tightening cycle that they've been very communicative ahead of time, 0:06:03.680 --> 0:06:05.520 and so I don't think they would want a surprise market, 0:06:05.839 --> 0:06:07.960 So we don't have a ton more data. That being said, 0:06:08.080 --> 0:06:11.080 I think the further meetings, the November the December, it 0:06:11.200 --> 0:06:13.480 totally becomes data dependent, and a lot of it's going 0:06:13.520 --> 0:06:15.800 to be that focus on the employment side. Right. The 0:06:15.839 --> 0:06:18.279 employment report is yet again like it used to be 0:06:18.320 --> 0:06:21.680 pre pandemic. The big market driver inflation has sort of 0:06:21.680 --> 0:06:24.280 fallen to the wayside now that it's doing what it's 0:06:24.279 --> 0:06:25.760 supposed to do well. 0:06:25.800 --> 0:06:27.360 We may not be getting a lot of data between 0:06:27.400 --> 0:06:29.080 now and then, but we're at least getting quite a 0:06:29.120 --> 0:06:31.159 few FED speakers today thud A Reserve Bank of New 0:06:31.240 --> 0:06:34.120 York President John Williams said it's now appropriate for the 0:06:34.160 --> 0:06:37.159 FED to reduce interest rates given progress on lowering inflation 0:06:37.240 --> 0:06:39.360 and a cooling in the labor market. Here's what he 0:06:39.400 --> 0:06:41.360 said in a speech prepared for an event held by 0:06:41.400 --> 0:06:43.600 the Council on Foreign Relations in New York. 0:06:44.360 --> 0:06:47.600 The current restrictive stance of monetary policy has been effective 0:06:47.600 --> 0:06:51.040 in restoring balance to the economy and in bringing inflation down. 0:06:51.760 --> 0:06:54.520 With the economy now and ecuopoise and inflation on a 0:06:54.520 --> 0:06:57.200 path to two percent, it is now appropriate to dial 0:06:57.240 --> 0:06:59.880 down the degree of restrictiveness in the stance of policy 0:07:00.200 --> 0:07:02.520 by reducing the target range for the federal funds rate. 0:07:03.600 --> 0:07:06.200 Okay, that was Federaliserve Bank of New York President John 0:07:06.240 --> 0:07:10.560 Williams Equipoise, Mike McKee. We're always parsing the words that 0:07:10.600 --> 0:07:13.760 we hear from J. Powell and other Federal Reserve officials. 0:07:14.560 --> 0:07:16.679 This is this is one that I haven't heard. 0:07:17.040 --> 0:07:18.040 He's just showing off. 0:07:18.280 --> 0:07:22.040 I mean, it's arriving in the sports car and you know, 0:07:22.360 --> 0:07:26.440 spinning around as you arrive. Equipoise basically means in balance, 0:07:26.560 --> 0:07:29.720 and he's talking about the labor market is and inflation 0:07:29.840 --> 0:07:33.080 are in balance now, so we're we're in equipoise. 0:07:33.600 --> 0:07:33.880 Uh. 0:07:33.920 --> 0:07:38.080 It's not even what I would call FED or economics 0:07:38.880 --> 0:07:42.520 nerd word or code word. It's just a fancy way 0:07:42.560 --> 0:07:43.440 of saying in balance. 0:07:43.520 --> 0:07:44.640 So don't read too much into it. 0:07:44.680 --> 0:07:45.920 Don't read too much into it. 0:07:46.560 --> 0:07:49.320 I think he just wanted to be clever and get 0:07:49.400 --> 0:07:52.040 some attention and have people like you. 0:07:52.080 --> 0:07:54.720 Asked what I was gonna say, Emily, it's working because 0:07:54.720 --> 0:07:55.480 I'm talking about it. 0:07:55.560 --> 0:07:57.120 Yeah, exactly, I'm impressed. 0:07:57.480 --> 0:07:59.240 Thank you. Hey, go ahead, Emily. 0:07:59.280 --> 0:08:00.880 I know you're gonna think, oh, well, I was just 0:08:00.920 --> 0:08:03.640 gonna I wanted to pivot to the inflation report because 0:08:04.080 --> 0:08:06.240 now we have this, I guess signal that the FED 0:08:06.320 --> 0:08:09.680 isn't as focused on that part of their mandate. So then, 0:08:09.960 --> 0:08:12.520 how Mike are you thinking about the data that we're 0:08:12.520 --> 0:08:15.840 going to get next week on inflation? Doesn't move the 0:08:15.880 --> 0:08:16.480 needle at. 0:08:16.400 --> 0:08:17.960 All, doesn't move the needle. 0:08:18.440 --> 0:08:22.600 I think Sophie's right that at this point, when you 0:08:22.600 --> 0:08:25.520 look at what's forecast, it's basically no change from what 0:08:25.560 --> 0:08:28.800 we saw in July. Headline goes down some on base effects, 0:08:29.240 --> 0:08:33.400 but it doesn't tell you that things are getting worse. 0:08:33.760 --> 0:08:36.280 And all of the Fed officials who've spoken recently in 0:08:36.280 --> 0:08:38.760 including Waller and Williams today say we don't think we're 0:08:38.800 --> 0:08:42.079 going to get inflation out of the labor market. So 0:08:42.280 --> 0:08:45.560 at this point it's just kind of confirming that they 0:08:45.559 --> 0:08:47.480 can go ahead with what they're doing, and I think 0:08:47.520 --> 0:08:52.079 we move away from it being the indicator every month. 0:08:52.480 --> 0:08:54.880 We'll stick with jobs. I'll see you guys October fourth. 0:08:54.960 --> 0:08:59.240 But it's not going to be inflation unless there's some 0:08:59.280 --> 0:09:01.760 sort of surprise, especially with the oil prices going down now, 0:09:01.800 --> 0:09:02.320 who knows. 0:09:02.760 --> 0:09:05.199 Hey, Sophia, I want to give you the last word here. 0:09:05.760 --> 0:09:09.400 Is it fair for j Powell to declare victory at 0:09:09.400 --> 0:09:09.880 this point? 0:09:09.960 --> 0:09:10.280 Was this? 0:09:10.520 --> 0:09:12.520 Is this a soft landing? Has the plane been landed? 0:09:14.600 --> 0:09:18.360 Oh that's a tough question. I think it's too soon 0:09:18.480 --> 0:09:22.120 to declare victory, but I do think the window for 0:09:22.160 --> 0:09:25.319 a soft landing is there. We are definitely slowing. The 0:09:25.400 --> 0:09:28.760 US economy is definitely slowing, right, Hiring is slowing. But 0:09:29.040 --> 0:09:32.560 sort of what John Williams said, right, reducing the restriction 0:09:32.720 --> 0:09:34.440 right now is definitely the right thing to do, with 0:09:34.600 --> 0:09:36.920 Swaller saying as well. So I think it's too soon 0:09:37.000 --> 0:09:39.800 to take a victory lap, but I think they can 0:09:39.880 --> 0:09:42.360 still hold their breath and maybe they can. 0:09:42.880 --> 0:09:44.120 All Right, A big thank you to both of you. 0:09:44.160 --> 0:09:47.440 Michael McKee, Bloomberg News International Economics and Policy correspondent. Here 0:09:47.440 --> 0:09:50.719 in our studio, Sophia Carney, a Letterman Senior economist. Over 0:09:50.800 --> 0:09:51.960 at FHN. 0:09:52.880 --> 0:09:56.400 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:56.440 --> 0:09:59.640 Live weekday afternoons from two to five pm Eastern Listen 0:09:59.679 --> 0:10:02.400 on card Play and then broud Otto with a Bloomberg 0:10:02.440 --> 0:10:06.000 Business act or wants us live on YouTube. 0:10:06.600 --> 0:10:08.920 Well, we are all in on the implications of this 0:10:09.000 --> 0:10:11.959 morning's payroll's number, non farm payrolls rising by one hundred 0:10:11.960 --> 0:10:15.160 and forty two thousand last month, the three month average 0:10:15.360 --> 0:10:18.080 at the lowest going back to mid twenty twenty. That 0:10:18.160 --> 0:10:20.800 unemployment rate did edge down the four point two percent. 0:10:20.840 --> 0:10:23.000 It was the first decline in five months, reflecting a 0:10:23.040 --> 0:10:27.040 reversal in temporary layoffs. Somebody who's got a great view 0:10:27.200 --> 0:10:29.880 of the labor market as Becky Frankowitz. She's chief commercial 0:10:29.880 --> 0:10:32.720 Officer and president of North America over at Manpower Group. 0:10:32.760 --> 0:10:36.400 It's a company that sources and manages talent and manages 0:10:36.440 --> 0:10:40.400 employees for more than four hundred thousand clients. Becky joins 0:10:40.480 --> 0:10:44.120 US from Milwaukee. Becky hiring was weighed down by job 0:10:44.160 --> 0:10:50.160 losses in manufacturing, retail, trade, information, education, and healthcare, boosted 0:10:50.240 --> 0:10:54.079 headcount by the least since going back to twenty twenty two. 0:10:54.160 --> 0:10:57.120 Does this match what you're seeing at Manpower Group? 0:10:58.600 --> 0:11:01.679 Yeah, so, I'd say Tim, it's another example of what 0:11:01.679 --> 0:11:05.400 we're calling the great waiting game. We have employers waiting 0:11:05.559 --> 0:11:08.640 to do big hiring until they see some proof of 0:11:08.920 --> 0:11:12.520 economic improvement. And we see employees waiting to change jobs 0:11:12.520 --> 0:11:15.360 because the quick rate held waiting has changed jobs until 0:11:15.400 --> 0:11:17.800 they get proof that the economy is proving. And so 0:11:17.960 --> 0:11:20.760 both sides have a waiting game. The other thing I 0:11:20.760 --> 0:11:23.360 would say is this, while it's less than we expected, 0:11:23.720 --> 0:11:26.840 Tennis isn't a bad report, but the revisions in July 0:11:27.080 --> 0:11:29.920 month over month, it's an improvement. It's definitely not a blockbuster, 0:11:30.240 --> 0:11:33.079 But I would say another indication of everyone's just holding 0:11:33.080 --> 0:11:34.240 it's quite stable out there. 0:11:34.880 --> 0:11:37.640 You talk about this waiting game, what would be the 0:11:37.720 --> 0:11:43.160 catalyst that would then propel employers to start hiring more 0:11:43.160 --> 0:11:44.680 extensively than they are right now. 0:11:45.760 --> 0:11:48.280 Emily, I asked that all the time to leaders across 0:11:48.280 --> 0:11:51.400 our country, and I hear two things. One, the Fed's 0:11:51.480 --> 0:11:55.880 decision in September is pivotal, very very important to employers 0:11:56.160 --> 0:11:59.160 to give them a proof point, not a forecast, not 0:11:59.240 --> 0:12:01.840 a suggestion of improvement, but a proof point that things 0:12:01.840 --> 0:12:05.320 are going to improve. So that's important. And we're also 0:12:05.480 --> 0:12:08.600 increasingly hearing companies, you know, wanting to wait and see 0:12:08.600 --> 0:12:10.960 what happens with the presidential election. So I would say 0:12:10.960 --> 0:12:13.960 on the employer side, definitely, the first position is the 0:12:13.960 --> 0:12:15.199 FED decision in September. 0:12:15.520 --> 0:12:18.120 What are companies waiting for with the presidential election? 0:12:18.679 --> 0:12:19.280 I e. 0:12:19.720 --> 0:12:22.840 What decisions are they holding off on? And how would 0:12:23.280 --> 0:12:27.000 a Harris administration differ from a Trump administration in terms 0:12:27.040 --> 0:12:28.720 of how they're thinking about hiring. 0:12:29.920 --> 0:12:32.319 Yes, the second part of that's not my air of expertise, 0:12:32.360 --> 0:12:34.120 but I definitely can address the first part of it 0:12:34.160 --> 0:12:36.280 in terms of why are they waiting on this. It 0:12:36.360 --> 0:12:40.280 is another signal of uncertainty to you know, American companies. 0:12:40.640 --> 0:12:43.360 They want to know what is going to happen in 0:12:43.360 --> 0:12:45.960 the future. They want to answer the question you're asking, 0:12:46.040 --> 0:12:48.559 how is this going to look different under either administration? 0:12:49.000 --> 0:12:52.520 But this holding spending on the sidelines tim isn't new. 0:12:52.840 --> 0:12:56.680 We've seen capital expenditures really being held waiting for big 0:12:56.720 --> 0:12:59.960 tech investments. I would say, now we're starting to see, 0:13:00.000 --> 0:13:01.760 you know, the surprise. You know, I like to look 0:13:01.800 --> 0:13:04.200 at the good in the report, the surprise and the 0:13:04.240 --> 0:13:06.120 report and the watchouts. You know, the good in the 0:13:06.160 --> 0:13:12.040 report is relatively steady. Unemployment, wages, workforce participation, a little movement, 0:13:12.080 --> 0:13:16.840 but relatively steady. The surprise is the way work is 0:13:16.880 --> 0:13:20.960 getting done is changing now. Is this long term short term? 0:13:21.000 --> 0:13:23.520 I don't know, but I can tell you that those 0:13:23.640 --> 0:13:27.720 working or holding part time jobs increased to seven point 0:13:27.800 --> 0:13:31.080 nine percent. It's the highest percentage we've had since October 0:13:31.080 --> 0:13:33.640 of twenty twenty one. And back to your question on 0:13:33.720 --> 0:13:37.160 what are employers waiting on. They're looking for flexibility while 0:13:37.160 --> 0:13:40.080 they're waiting, and so they're looking for part time workers, 0:13:40.400 --> 0:13:43.600 bringing in new talent, those who are retired those who 0:13:43.640 --> 0:13:48.200 are doing caregiving and need flexibility, and employees also waiting. 0:13:48.320 --> 0:13:52.480 As mentioned, they're looking for some reassurance in their income 0:13:53.040 --> 0:13:55.199 and they're also looking for flexibility. So that was one 0:13:55.240 --> 0:13:58.480 of the surprises in this report that hasn't really been 0:13:58.679 --> 0:14:00.560 been talked about, and I have you others. 0:14:01.840 --> 0:14:05.320 So, Becky, when I look at the gains in this 0:14:05.360 --> 0:14:09.160 report for wages, we saw pay gains beat forecast, average 0:14:09.200 --> 0:14:12.240 hourly earnings rising zero point four percent compared with a 0:14:12.280 --> 0:14:16.560 point three percent median estimate. From your view, do you 0:14:16.600 --> 0:14:21.040 feel like workers feel like those wage increases are enough? 0:14:21.280 --> 0:14:25.000 Is that helping them kind of combat higher interest rates 0:14:25.160 --> 0:14:28.520 and higher inflation? Do they feel like they are seeing 0:14:28.520 --> 0:14:31.640 those wages kind of keep up with the rise in inflation. 0:14:32.720 --> 0:14:35.840 Yeah, Emily, they answered, that's definitely not. But again that's 0:14:35.880 --> 0:14:38.120 not new. So when you hear me saying stability, it's 0:14:38.160 --> 0:14:41.760 also stability of mindset, Like zero point four percent versus 0:14:41.840 --> 0:14:44.520 point three percent. When we're looking at you know, inflation 0:14:44.640 --> 0:14:48.040 starting to starting to level off, we're still seeing that 0:14:48.240 --> 0:14:51.600 talent is sitting tied. They're a little anxious about making 0:14:51.640 --> 0:14:55.880 any big moves. Again, they're they're waiting as well, but 0:14:55.920 --> 0:14:59.640 we've seen a real change in wage composition. So during 0:14:59.640 --> 0:15:03.160 the cry, we were paying significant increases for people who 0:15:03.200 --> 0:15:06.400 would change jobs. In fact, it hit about sixteen percent 0:15:06.480 --> 0:15:09.480 increase versus on average at the time, it was about 0:15:09.520 --> 0:15:13.160 seven percent for job stayers. Now we're seeing it back 0:15:13.200 --> 0:15:16.320 to pre pandemic levels where we're seeing job stayers get 0:15:16.360 --> 0:15:19.360 anywhere from three to five percent and job movers get 0:15:19.400 --> 0:15:23.040 anywhere from six eight percent. And so that's really stabilized 0:15:23.080 --> 0:15:25.360 as well, and so we're not really incenting people to 0:15:25.440 --> 0:15:27.760 make moves, whether it's through wages or whether it's through 0:15:27.800 --> 0:15:28.680 new job offers. 0:15:29.160 --> 0:15:32.000 FED certainly likes to see data like that, Becky, because 0:15:32.000 --> 0:15:34.320 it means that wages aren't going up, and it means 0:15:34.360 --> 0:15:37.360 that it's you know, FED friendly in terms of inflation. 0:15:37.960 --> 0:15:40.880 I do wonder about what other normalization you're seeing at 0:15:40.920 --> 0:15:44.360 Manpower Group, because this idea of this imbalance has that 0:15:44.400 --> 0:15:47.480 has been here in the wake of COVID. I think 0:15:47.520 --> 0:15:50.000 it's still is still there for in a lot of 0:15:50.000 --> 0:15:54.240 different places. Where else are you seeing a normalization at TIM? 0:15:54.280 --> 0:15:56.280 I just had this discussion yesterday with one of the 0:15:56.280 --> 0:15:59.280 big CEOs in our country and asked me the question 0:15:59.280 --> 0:16:02.280 from a permanent employer angle, which is, hey, is talent 0:16:02.320 --> 0:16:06.080 shortage gone, is it's stabilizing. Talent shortage is still here 0:16:06.280 --> 0:16:10.360 and likely will extend and expand as we start seeing 0:16:10.360 --> 0:16:13.760 those investments come off the sidelines, mainly into tech. And 0:16:13.800 --> 0:16:15.880 you know, all companies are tech companies. I'm not just 0:16:15.920 --> 0:16:18.240 talking about the Googles and the Microsofts of the world. 0:16:18.720 --> 0:16:22.280 The number one higher of AI and those kind of 0:16:22.280 --> 0:16:24.600 skills is actually a bank and capital one, and so 0:16:24.720 --> 0:16:28.160 all companies are tech companies. But what we're seeing is 0:16:28.360 --> 0:16:31.560 there's this pent up demand for these specialty skills, and 0:16:31.640 --> 0:16:35.320 right now employers are moving talent around to fill gaps 0:16:35.560 --> 0:16:38.400 versus bringing in those net new skills, and so talent 0:16:38.440 --> 0:16:41.400 shortage is here and it's going to even you know, 0:16:41.480 --> 0:16:43.960 be a bigger consideration as we go forward, is we 0:16:44.000 --> 0:16:47.320 see those tech investments happen and the need for skills 0:16:47.320 --> 0:16:49.520 that have been talking about for you know, years now 0:16:49.600 --> 0:16:51.960 or year and a half at least, those will actually 0:16:52.000 --> 0:16:53.280 come to come to reality. 0:16:53.320 --> 0:16:55.080 Well, what are those skills that are actually needed? Because 0:16:55.080 --> 0:16:56.880 we've been having this discussion quite a bit over the 0:16:56.960 --> 0:17:00.760 last few months about the role that AI will in 0:17:00.800 --> 0:17:03.520 this and the idea that Okay, well, people who were 0:17:03.560 --> 0:17:06.480 told to go learn to code, some of those folks 0:17:06.560 --> 0:17:08.760 might be out of a job because these lms can 0:17:08.840 --> 0:17:11.520 do a pretty good job coding themselves. What are you 0:17:11.560 --> 0:17:14.639 seeing as the jobs that will actually be needed in 0:17:14.680 --> 0:17:15.359 the coming years. 0:17:16.320 --> 0:17:18.320 Yeah, so, Tim, you asked me in the right horizon, 0:17:18.359 --> 0:17:21.600 the coming years, I don't see. You know, business developers, coders, 0:17:21.840 --> 0:17:24.040 they're still in the top three jobs open in the 0:17:24.040 --> 0:17:27.200 country today, software developers. That's still a very important skill. 0:17:27.480 --> 0:17:30.359 As you look out and AI starts to take hold. 0:17:30.480 --> 0:17:33.080 It's less than two percent of total jobs in demand 0:17:33.119 --> 0:17:36.440 by the way AI machine learning jobs in the country today, 0:17:36.760 --> 0:17:39.960 but as we look out it will accelerate. And those 0:17:40.440 --> 0:17:45.080 the skills around capability for analytical assessment, you know, the 0:17:45.680 --> 0:17:48.399 neatest one I think of these prompt engineers because basically 0:17:48.400 --> 0:17:50.440 that's a fancy word for saying, ask the computer the 0:17:50.520 --> 0:17:52.760 right question in the right way. And so this idea 0:17:52.800 --> 0:17:55.639 around natural language models and how do I ask a question? 0:17:56.280 --> 0:17:59.320 Those will be very accessible jobs, which you know, to 0:17:59.400 --> 0:18:02.440 your point, the coders, they're not going away tomorrow. They'll 0:18:02.480 --> 0:18:05.960 evolve into something as well. But I think the accessibility 0:18:06.000 --> 0:18:08.000 of tech will really come into play as we look 0:18:08.040 --> 0:18:11.439 across the horizon. But I think the other kind of 0:18:11.440 --> 0:18:13.879 interesting thing that we're seeing as we go through the 0:18:13.920 --> 0:18:17.440 summer is you heard me talk before about this cost 0:18:17.440 --> 0:18:21.800 conscious consumer that's really driving consumption in our country. What 0:18:21.880 --> 0:18:24.080 we saw and what we're seeing in real time, we 0:18:24.160 --> 0:18:26.280 saw it starting with the jobs report, but we see 0:18:26.280 --> 0:18:29.880 what's happening today. We're seeing really a decline in those 0:18:29.960 --> 0:18:34.119 retail segments big hires, great clips that I talk about frequently, 0:18:34.440 --> 0:18:37.679 Walmart starting to see decline in their open jobs. And 0:18:37.800 --> 0:18:39.919 at the same time, we're seeing an increase now in 0:18:39.960 --> 0:18:43.399 registered nurses, which you know has been depressed, but also 0:18:43.440 --> 0:18:46.000 in mental health support. So we're seeing new entrants in 0:18:46.040 --> 0:18:49.080 the top twenty five hires. A company honestly I hadn't 0:18:49.080 --> 0:18:51.760 heard of called LifeStance is now moved in the top 0:18:51.800 --> 0:18:54.640 twenty five hores and it's a mental health support company. 0:18:54.920 --> 0:18:57.720 So we're seeing a change in the composition, yes, on 0:18:57.760 --> 0:18:59.800 the specialized skills that you ask about, but also on 0:18:59.840 --> 0:19:02.600 the general skills in the economy today, which is you know, 0:19:02.640 --> 0:19:03.240 good news. 0:19:03.440 --> 0:19:05.400 I actually did want to talk a little bit more 0:19:05.440 --> 0:19:08.040 about the composition of what kinds of jobs are being 0:19:08.080 --> 0:19:10.560 added when you look at the jobs report that we 0:19:10.720 --> 0:19:14.359 just got. Job growth was led by construction and healthcare, 0:19:14.480 --> 0:19:17.959 while manufacturing jobs saw declines. And I wanted to know, 0:19:18.040 --> 0:19:20.720 what does that tell you about the trajectory of the 0:19:20.840 --> 0:19:22.639 US economy. 0:19:22.800 --> 0:19:24.520 Yeah, so, you know, I said, I like to talk 0:19:24.560 --> 0:19:27.199 about the good, the surprise, and the watchouts. My number 0:19:27.240 --> 0:19:31.000 one watch out, Emily, is what's happening in manufacturing. Specifically, 0:19:31.000 --> 0:19:33.160 we saw what the numbers were on durable goods that 0:19:33.280 --> 0:19:38.679 was down. That has broad reaching supply chain considerations. So 0:19:38.760 --> 0:19:41.760 that's one of my watchouts. I am pleased to see 0:19:41.800 --> 0:19:45.160 the resurgence of health again. Registered nurses have been quite 0:19:45.240 --> 0:19:48.040 volatile coming out of the crisis. In fact, a lot 0:19:48.040 --> 0:19:51.359 of declines now not net declines, but declines month over month. 0:19:51.400 --> 0:19:54.080 Given the surge and demand, we're seeing that start to 0:19:54.080 --> 0:19:57.240 come back. And again there's a whole new segment of 0:19:57.280 --> 0:20:00.760 healthcare that's truly emerging, which is mental heal health support, 0:20:01.119 --> 0:20:04.119