It's getting harder to find a job. But here's the good news.

By Hannah Erin Lang

Ahead of Friday's jobs report, new data suggest companies are hesitant to lay off employees

It's getting a lot harder to get hired - but there's at least one silver lining to the weakening job market.

The number of layoffs in the U.S. remained low in July, according to a Wednesday report from the Labor Department. Layoffs and firings were relatively unchanged at 1.8 million, and at lower levels than they were in the last few months of 2019.

Layoffs skyrocketed to unprecedented levels in the early days of the COVID-19 pandemic. During the global financial crisis of 2008-09, they hit a peak of approximately 2.7 million.

The low layoffs number was one bright spot in an otherwise disappointing report, which showed job openings dropping to their lowest levels in more than three years. Even in healthcare and government, two sectors that helped power the job market over the last year, hiring started to lag.

The upshot? Companies aren't hiring much - but they're not making sweeping job cuts, either.

That might be cold comfort to job seekers facing a hunt far more challenging than it was two years ago. But if you're already employed, you've got a better chance of holding on to the job that you have.

What explains companies' hesitancy to make cuts? Economists point to the overheated job market and widespread worker shortages of the pandemic era.

Businesses remember all too well how understaffed they might have found themselves in 2021 or 2022 - and how they had to shell out big raises and other concessions to win workers, Michael Walden, a Raleigh, N.C.-based economist, told MarketWatch.

"Businesses want to keep their labor force, but they don't want to expand," he said. "Likely many of them worked very, very hard to find people."

Atlanta Fed President Raphael Bostic mentioned in an essay Wednesday that he has seen that dynamic take shape in his district.

"Employers also tell us in direct conversations that they are hiring more cautiously. Some are even seeking to reduce ranks through attrition. Few, though, are contemplating layoffs," Bostic wrote in his quarterly note. "In fact, an interesting theme emerged in conversations with business leaders - some fear large layoffs might tarnish their reputation."

Read more: Fed's Bostic: Economy is 'losing momentum' but there is no sense of looming crash or panic from business leaders

The Federal Reserve's Beige Book, a report that collects anecdotes of economic conditions across the central bank's 12 districts, also noted that companies are trying to manage their head counts in other ways.

"Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook," the report said - noting that despite this dynamic, "accounts of layoffs remained rare."

There are some high-profile firms that have made cuts. IBM (IBM), Intel (INTC) and Goldman Sachs (GS) are among those that have announced considerable layoffs this year.

But Wednesday's data suggested those headlines are the exception, not the rule.

Investors are paying extra attention to the labor market this week amid concerns about the strength of the U.S. economy. Policymakers at the Fed will announce their latest move on interest rates at a Sept. 17-18 meeting. The numbers in Friday's employment report, which will show how many jobs the economy added last month, could determine the size of a rate cut.

"I think we're in a transition and at an inflection point," Walden noted.

Will the labor market slowdown become a meltdown? "I don't think so," he said. "But for [businesses] now, uncertainty leads to being cautious."

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-Hannah Erin Lang

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09-05-24 1201ET

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