A surprisingly typical labor market
The widely followed nonfarm payroll report measures total employment across industries using an employer‑based survey. Because different establishments respond each month, the data can fluctuate meaningfully, making it harder to infer the real‑time experience of workers and job seekers.
This is why we place greater emphasis on worker flows derived from the household survey, which follow people over time rather than relying on net job counts at firms. In today’s supply‑constrained labor market, shaped by population aging and more limited immigration, these flow measures better capture underlying dynamics and suggest the labor market is behaving much as we would expect in a steadily growing economy. This matters because the labor market’s health is vital to the health of the overall economy and an essential input to Federal Reserve policymaking. A steady job market allows the Fed to focus on inflation, which demands attention amid the recent surge in energy prices.
Historically low layoffs signal a steady labor market
The job-finding rate is solid, while the job-loss rate remains unusually low
The job-finding rate—currently around 26%—indicates that unemployed workers are securing jobs at a pace consistent with historical norms, even as the labor market has become more competitive in recent years. Meanwhile, the job-loss rate remains exceptionally low—at less than 1%—highlighting the continued rarity of layoffs and employers’ reluctance to let go of current staff.
Taken together, these measures point to resilient labor demand: Employers remain cautious about expanding head count, but they are also firmly holding onto the workers they already have.
Nevertheless, some softening is expected
We also look to Vanguard’s own 401(k) retirement plan data, which are administrative and not based on a survey, so the “response rate” is 100%. Based on those data, we estimate that 58,000 jobs were created in April. (The BLS's own estimate is that 115,000 nonfarm jobs were created in April.)
Today’s labor market appears more resilient than recent payroll swings alone might suggest. Still, headwinds—including higher energy prices, a more cautious consumer, and the pace of AI adoption—are likely to weigh modestly on new job creation. We forecast the unemployment rate to edge up gradually to about 4.6% by the end of 2026.
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