Employment Growth Slows in Interest Rate Sensitive Job Sectors

The more interest rate sensitive employment sectors are seeing a bigger slowdown in employment growth (and in fact, job losses in some instances), indicating a rolling recession.

The highest wage sectors such as Information (largely tech jobs), Professional and Business Services (office-based jobs) and Financial Activities have seen interest rate pressures erode recent growth. Conversely, sectors like Education and Health Services and Government, which are understandably well insulated from interest rates, are still achieving good to great growth, according to recent data from the Bureau of Labor Statistics.

Construction and Leisure and Hospitality Services are two job sectors to keep an eye on in the next few months. Construction seems like it's bound to ease. Leisure and Hospitality Services has boomed due to pandemic-era excess savings, but with those savings burning off how long will that sector continue to see its strong growth?

Overall, the Fed seems to have done a pretty good job of threading the needle for a soft landing thus far. There's always risk for an unforeseen economic shock, but the Fed had a Goldilocks-esque challenge of finding a rate that wasn't too hot, nor too cold, but instead just right. And current rates seem to be a sweet spot (albeit to the chagrin of some of those more interest rate sectors).

Tying it all back to the housing market, the still-resilient overall nature of job growth has been a boon for demand. And perhaps surprisingly so, the drag on higher wage sectors hasn't translated to slowing Class A performance either. Considering overall resilience of housing demand, (keep in mind 1st quarter 2024 saw record absorption for the first 90 days of the year), there are no canaries in the coal mine that would suggest a widespread slowdown.