The emergence from the COVID-19 pandemic presented the economy with a confluence of challenges associated with its economic reopening. These included, but were not limited to, supply chain disruptions, elevated inflation, rising interest rates, and a highly constrained labor market. A significant degree of interdependence exists between these factors. For instance, supply chain bottlenecks and a tight labor market contribute to inflationary pressures, ultimately prompting the Federal Reserve to raise interest rates in an effort to curb inflation and achieve its target range of 2-3% while maintaining full employment.
The following figure depicts the month-over-month employment levels for Florida since 2020. Florida has experienced considerable employment growth since the pandemic, surpassing her pre-pandemic levels by October 2021. As a point of reference, the US did not hit this mark until August 2022. However, as the Fed has aggressively raised rates to counter inflation and slow the economy, a critical question arises: have Florida employers correspondingly adjusted their hiring practices?
Assessing Labor Market through Job Postings Data
While employment levels are an indicator of past hiring activity, a more forward looking indicator of labor market activity can be gleaned by analyzing year-over-year changes in the ratio of job postings to the number of unemployed individuals (PU ratio) within a specific region. The ratio serves as a proxy for immediate hiring activity as it represents the relationship between employers' hiring activity in the immediate future and the available pool of unemployed talent actively seeking work. Generally, a higher ratio signifies a tighter labor market. As Florida provides these data monthly, we're able to monitor the state's labor market closer to real time.
Employing job postings and unemployed data encompassing all of Florida's Workforce Development regions, this analysis presents the year-over-year change (February 2023 over February 2024) in each region's PU ratio. Regions denoted in red signify a substantial decline in PU ratio. Conversely, regions in blue indicate an increase. The data reveals a geographically nuanced picture. The Florida panhandle exhibited a precipitous decline in its PU ratio, with some regions experiencing a near 50% decline. The broader Miami region, however, demonstrated a healthy 27% increase in the ratio. The remainder of the state displayed a pattern of more moderate declines, with isolated pockets of modest growth observed in the Sarasota, Winter Haven, and Fort Lauderdale regions.
Conclusion: A Softening Labor Market, Seasonal Fluctuation or a Return to Pre-pandemic Hiring Activity?
Florida's labor market appears to be softening across several regions, except South Florida and select pockets in central Florida. The data presents a tale of two regions. Those regions north of the I-4 corridor appear to be slowing down, with a 13.9% decline in aggregate job postings. In contrast, those regions south of the corridor (including Tampa, Orlando, and Miami) experienced an increase of 6.7%. In the aggregate, the state saw an increase in both job postings and unemployed.
The figure above presents the statewide PU ratios from January 2010 to February 2024. The state has experienced a significant decline from its pandemic-era high of 2.04 during April 2022, as by February 2024 statewide activity appears to have, at least, returned to pre-pandemic levels. However, between February '23 to February '24, the number of individuals looking for work (unemployed) outpaced the number of job postings across the state, thus Florida's PU ratio declined by roughly 14%, or from 1.47 to 1.27.
Although the state's PU ratio remains greater than 1 (indicating more job postings than workers actively seeking employment), a declining ratio may indicate a softening job market for much of the state, while those regions south of the I-4 corridor (where most of the state's population resides) continue to drive much of Florida's demand for talent.
Do these data signify a nascent economic slowdown, a seasonal fluctuation or a return to pre-pandemic hiring activity? Stay tuned as ABLE Operations continues to monitor Florida’s economic performance and its impact on regional labor markets across the state.
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