Despite employers adding 428,000 jobs in April across a broad number of industries, productivity decreased 7.5% in Q1 2022, the largest decline since 1947, and labor costs increased at an unsustainable 7.2% over the last four quarters, the largest four-quarter increase since 1982.
Telework decreases: In April, 7.7% of employed persons teleworked because of the pandemic, down from 10.0% in March.
- Finance and insurance (23.2%), Professional and technical services (22.6%) and Information (19.5%) industries had the highest numbers of teleworkers.
Six industries accounted for two-thirds of the April gains:
- Leisure and hospitality (+78,000);
- Manufacturing (+55,000)—but manufacturing employment is still down by 56,000 since February 2020;
- Transportation and warehousing (+52,000);
- Professional and business services (+41,000);
- Financial activities (+35,000); and
- Health care (+34,000)—but health care jobs are down by 250,000 since February 2020.
Small businesses struggling: Separately, ADP reported businesses with less than 50 employees actually lost 120,000 jobs in April, the worst drop in two years.
Outlook: The economy is expected to slow as the Federal Reserve increases interest rates. Unless inflation quickly subsides and employers can get labor costs under control, a recession in 2023 will become more likely than a soft landing.
