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Business

Corporate Layoffs Spread Beyond High-Growth Tech Giants

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The headline-grabbing expansion of layoffs beyond high-growth technology companies stands in contrast to historically low levels of jobless claims and news that companies such as

Chipotle Mexican Grill Inc.

and

Airbus SE

are adding jobs.

This week, four companies trimmed more than 10,000 jobs, just a fraction of their total workforces. Still, the decisions mark a shift in sentiment inside executive suites, where many leaders have been holding on to workers after struggling to hire and retain them in recent years when the pandemic disrupted workplaces.

Live Q&A

Tech Layoffs: What Do They Mean?

The creator of the popular layoff tracker Layoffs.fyi Roger Lee and the head of talent at venture firm M13 Matt Hoffman sit down with WSJ reporter Chip Cutter, to discuss what’s behind the recent downsizing and whether it will be enough to recalibrate ahead of a possible recession.

Unlike

Microsoft Corp.

and Google parent

Alphabet Inc.,

which announced larger layoffs this month, these companies haven’t expanded their workforces dramatically during the pandemic. Instead, the leaders of these global giants said they were shrinking to adjust to slowing growth, or responding to weaker demand for their products.

“We are taking these actions to further optimize our cost structure,”

Jim Fitterling,

Dow’s chief executive, said in announcing the cuts, noting the company was navigating “macro uncertainties and challenging energy markets, particularly in Europe.”

The U.S. labor market broadly remains strong but has gradually lost steam in recent months. Employers added 223,000 jobs in December, the smallest gain in two years. The Labor Department will release January employment data next week.

Economists from Capital Economics estimate a further slowdown to an increase of 150,000 jobs in January, which would push job growth below its 2019 monthly average, the year before pandemic began.

There is “mounting evidence of weakness below the surface,”

Andrew Hunter,

senior U.S. economist at Capital Economics wrote in a note to clients Thursday.

Last month, the unemployment rate was 3.5%, matching multidecade lows. Wage growth remained strong, but had cooled from earlier in 2022. The Federal Reserve, which has been raising interest rates to combat high inflation, is looking for signs of slower wage growth and easing demand for workers.

Many CEOs say companies are beginning to scrutinize hiring more closely.

Slower hiring has already lengthened the time it takes Americans to land a new job. In December, 826,000 unemployed workers had been out of a job for about 3½ to 6 months, up from 526,000 in April 2022, according to the Labor Department.

“Employers are hovering with their feet above the brake. They’re more cautious. They’re more precise in their hiring,” said

Jonas Prising,

chief executive of

ManpowerGroup Inc.,

a provider of temporary workers. “But they’ve not stopped hiring.”

Additional signs of a cooling economy emerged on Thursday when the Commerce Department said U.S. gross domestic product growth slowed to a 2.9% annual rate in the fourth quarter, down from a 3.2% annual rate in the third quarter.

Not all companies are in layoff mode.

Walmart Inc.,

the country’s biggest private employer, said this week it was raising its starting wages for hourly U.S. workers to $14 from $12, amid a still tight job market for front line workers. Chipotle Mexican Grill Inc. said Thursday it plans to hire 15,000 new employees to work in its restaurants, while plane maker Airbus SE said it is recruiting over 13,000 new staffers this year. Airbus said 9,000 of the new jobs would be based in Europe with the rest spread among the U.S., China and elsewhere. 

General Electric Co.

, which slashed thousands of aerospace workers in 2020 and is currently laying off 2,000 workers from its wind turbine business, is hiring in other areas. “If you know any welders or machinists, send them my way,” Chief Executive

Larry Culp

said this week.

Annette Clayton,

CEO of North American operations at

Schneider Electric SE,

a Europe-headquartered energy-management and automation company, said the U.S. needs far more electricians to install electric-vehicle chargers and perform other tasks. “The shortage of electricians is very, very important for us,” she said.

Railroad CSX Corp. told investors on Wednesday that after sustained effort, it had reached its goal of about 7,000 train and engine employees around the beginning of the year, but plans to hire several hundred more people in those roles to serve as a cushion and to accommodate attrition that remains higher than the company would like.

Freeport-McMoRan Inc.

executives said Wednesday they expect U.S. labor shortages to continue to crimp production at the mining giant. The company has about 1,300 job openings in a U.S. workforce of about 10,000 to 12,000, and many of its domestic workers are new and need training and experience to match prior expertise, President

Kathleen Quirk

told analysts.

“We could have in 2022 produced more if we were fully staffed, and I believe that is the case again this year,” Ms. Quirk said.

The latest layoffs are modest relative to the size of these companies. For example, IBM’s plan to eliminate about 3,900 roles would amount to a 1.4% reduction in its head count of 280,000, according to its latest annual report.

As interest rates rise and companies tighten their belts, white-collar workers have taken the brunt of layoffs and job cuts, breaking with the usual pattern leading into a downturn. WSJ explains why many professionals are getting the pink slip first. Illustration: Adele Morgan

The planned 3,000 job cuts at SAP affect about 2.5% of the business-software maker’s global workforce. Finance chief

Luka Mucic

said the job cuts would be spread across the company’s geographic footprint, with most of them happening outside its home base in Germany. “The purpose is to further focus on strategic growth areas,” Mr. Mucic said. The company employed around 111,015 people on average last year.

Chemicals giant Dow said on Thursday it was trimming about 2,000 employees. The Midland, Mich., company said it currently employs about 37,800 people. Executives said they were targeting $1 billion in cost cuts this year and shutting down some assets to align spending with the macroeconomic environment.

Manufacturer

3M Co.

, which had about 95,000 employees at the end of 2021, cited weakening consumer demand when it announced this week plans to eliminate 2,500 manufacturing jobs. The maker of Scotch tape, Post-it Notes and thousands of other industrial and consumer products said it expects lower sales and profit in 2023.

“We’re looking at everything that we do as we manage through the challenges that we’re facing in the end markets,” 3M Chief Executive

Mike Roman

said during an earnings conference call. “We expect the demand trends we saw in December to extend through the first half of 2023.”

Hasbro Inc.

on Thursday said it would eliminate 15% of its workforce, or about 1,000 jobs, after the toy maker’s consumer-products business underperformed in the fourth quarter.

Some companies still hiring now say the job cuts across the economy are making it easier to find qualified candidates. “We’ve got the pick of the litter,” said

Bill McDermott,

CEO of business-software provider

ServiceNow Inc.

“We have so many applicants.”

At

Honeywell International Inc.,

CEO

Darius Adamczyk

said the job market remains competitive. With the layoffs in technology, though, Mr. Adamczyk said he anticipated that the labor market would likely soften, potentially also expanding the applicants Honeywell could attract.

“We’re probably going to be even more selective than we were before because we’re going to have a broader pool to draw from,” he said.

Across the corporate sphere, many of the layoffs happening now are still small relative to the size of the organizations, said

Denis Machuel,

CEO of global staffing firm Adecco Group AG.

“I would qualify it more as a recalibration of the workforce than deep cuts,” Mr. Machuel said. “They are adjusting, but they are not cutting the muscle.”

Write to Chip Cutter at chip.cutter@wsj.com and Theo Francis at theo.francis@wsj.com

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Business

Hiring, Wage Gains Eased in December, Pointing to a Cooling Labor Market in 2023

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The U.S. labor market is losing momentum as hiring and wage growth cooled in December, showing the effects of slower economic growth and the Federal Reserve’s interest-rate increases.

After two straight years of record-setting payroll growth following the pandemic-related disruptions, the labor market is starting to show signs of stress. That suggests 2023 could bring slower hiring or outright job declines as the overall economy slows or tips into recession.

Employers added 223,000 jobs in December, the smallest gain in two years, the Labor Department said Friday. Average hourly earnings were up 4.6% in December from the previous year, the narrowest increase since mid-2021, and down from a March peak of 5.6%.

All told, employers added 4.5 million jobs in 2022, the second-best year of job creation after 2021, when the labor market rebounded from Covid-19 shutdowns and added 6.7 million jobs. Last year’s gains were concentrated in the first seven months of the year. More recent data and a wave of tech and finance-industry layoffs suggest the labor market, while still vibrant, is cooling.

“I do expect the economy to slow noticeably by June, and in the second half of the year we’ll see a greater pace of slowing if not outright contraction,” said

Joe Brusuelas,

chief economist at RSM U.S.

Friday’s report sent markets rallying as investors anticipated it would cause the Fed to slow its pace of rate increases. The central bank’s next policy meeting starts Jan. 31. The Fed’s aggressive rate increases aimed at combating inflation didn’t significantly cool 2022 hiring, but revisions to wage growth showed recent gains weren’t as brisk as previously thought.

The Dow Jones Industrial Average rose 700.53 points, or 2.13%, on Friday. The S&P 500 Index was up 2.28% and NASDAQ Composite Index advanced 2.56%. The benchmark 10-year Treasury yield declined 0.15 percentage point to 3.57%. Yields fall as bond prices rise.

The unemployment rate fell to 3.5% in December from 3.6% in November, matching readings earlier in 2022 and just before the pandemic began as a half-century low. Fed officials said last month the jobless rate would rise in 2023. December job gains were led by leisure and hospitality, healthcare and construction.

Historically low unemployment and solid hiring, however, might mask some signs of weakness. The labor force participation rate, which measures the share of adults working or looking for work, rose slightly to 62.3% in December but is still well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.

The average workweek has declined over the past two years and in December stood at 34.3 hours, the lowest since early 2020.

Hiring in temporary help services has fallen by 111,000 over the past five months, with job losses accelerating. That could be a sign that employers, faced with slowing demand, are reducing their employees’ hours and pulling back from temporary labor to avoid laying off workers.

The tech-heavy information sector lost 5,000 jobs in December, the Labor Department report showed. Retail saw a 9,000 rise in payrolls, snapping three straight months of declines.

Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic, according to layoffs.fyi, which tracks industry job cuts. On Wednesday,

Salesforce Inc.

said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that

Amazon.com Inc.

would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as

Facebook

parent

Meta Platforms Inc.,

DoorDash Inc.

and

Snap Inc.,

have also recently cut positions.

Companies in the interest-rate-sensitive housing and finance sectors, including

Redfin Corp.

,

Morgan Stanley

and

Goldman Sachs Group Inc.,

have also moved to reduce staff.


Months where overall jobs gained

Months where overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Months where

overall jobs gained

Months where

overall jobs declined

By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019

More than 20 million jobs were lost near the start of the pandemic

Employment returns to prepandemic level

A monthly gain of more than 4 million jobs

Other data released this week point to a slowing U.S. economy. New orders for manufactured goods fell a seasonally adjusted 1.8% in November, the Commerce Department said Friday. Business surveys showed a contraction in economic activity in December, according to the Institute for Supply Management. Manufacturing firms posted the second-straight contraction following 29 months of expansion, and services firms snapped 30 straight months of growth in December.

Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They saw the unemployment rate rising to 4.7% by December 2023.

“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” said

Andrew Hunter,

senior U.S. economist at Capital Economics. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”

Max Rottersman, a 61-year-old independent software developer, said he had been very busy with consulting jobs during much of the pandemic. But that changed over the summer when work suddenly dried up.

“I’m very curious to see whether I’m in high demand in the next few months or whether—what I sort of expect will happen—there will be tons of firing,” he said.

Despite some signs of cooling, the labor market remains exceptionally strong. On Wednesday, the Labor Department reported that there were 10.5 million job openings at the end of November, unchanged from October, well more than the number of unemployed Americans seeking work.

Some of those open jobs are at Caleb Rice’s home-renovation business in Calhoun, Tenn., which has been consistently busy since the start of the pandemic. The small company has raised pay and gone to a four-day week in an effort to hold on to workers.

“If I could get three more skilled hands right now, I’d be comfortable,” Mr. Rice said. “The way it goes is I’ll hire five, two will show up and of those two one won’t be worth a flip.”

Fed officials have been trying to engineer a gradual cooling of the labor market by raising interest rates. Officials are worried that a too-strong labor market could lead to more rapid wage increases, which in turn could put upward pressure on inflation as firms raise prices to offset higher labor costs.

The central bank raised rates at each of its past seven meetings and has signaled more rate increases this year to bring inflation down from near 40-year highs. Fed officials will likely take comfort in the slowdown in wage gains, which could prompt them to raise rates at a slower pace, Mr. Brusuelas, the economist, said.

“We’re closer to the peak in the Fed policy rate than we were prior to the report, and the Fed can strongly consider a further slowing in the pace of its hikes,” he said. “We could plausibly see a 25-basis-point hike versus a 50-basis-point hike at the Feb. 1 meeting.”

Write to David Harrison at david.harrison@wsj.com

Corrections & Amplifications
A graphic in an earlier version of this article showing the change in nonfarm payrolls since the end of 2019 was incorrectly labeled as change since January 2020. (Corrected on Jan. 6)

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Business

Laid Off Tech Workers Quickly Find New Jobs

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Most laid off tech workers are finding jobs shortly after beginning their search, a new survey shows, as employers continue to scoop up workers in a tight labor market.

About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a

ZipRecruiter

survey of new hires. That was just below the 83% share of all laid-off workers who were re-employed in the same time frame.

Nearly four in 10 previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in the survey. 

“Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,” said

Julia Pollak,

chief economist at ZipRecruiter. “They’re still the most sought-after workers with the most in-demand skills.” 

Job openings across the economy—at 10.3 million—are down from record highs but far exceed the number of unemployed Americans, providing opportunities for workers who lose their jobs and those who choose to seek another.

Workers previously employed in other industries, including entertainment and leisure, transportation and delivery, and manufacturing, also found new jobs quickly, the ZipRecruiter data showed.

The job market for tech workers is slowing as the broader economy falters under the pressure of Federal Reserve interest rate increases and high inflation. Layoffs and hiring freezes are occurring at startups and large tech companies such as Amazon.com Inc. and

Facebook

parent Meta Platforms Inc. that hired aggressively early on in the pandemic. The cuts are hitting workers in tech jobs—such as software engineers—and other corporate roles including recruiters.

Still, tech firms making cuts are outnumbered by those that are hiring.

A smaller share of tech workers is spending long periods searching for work after a layoff. About 5% of laid off tech workers who found jobs from April to October had spent more than six months hunting for work, down from 26% of those hired between August 2021 and February 2022, ZipRecruiter said.

Wen Huber, age 23, was laid off from a videographer job at a real estate tech startup in late July. Mr. Huber, who lives near Seattle, thought it would take awhile to land a new position, given he didn’t have a four-year-college degree and many other job seekers were flooding the tech job market.

“When I was applying, to be honest, I didn’t feel very confident because there was such an influx of competition with a lot of people also being laid off,” he said. 

Mr. Huber had built up a savings buffer, allowing him to be more selective in his job hunt as he sought to pivot into social media. He documented his unemployment experience in a series of videos on LinkedIn. The videos helped him land an interview—and ultimately an offer—for a social media manager job at a software startup, Mr. Huber said. He started in September.

“I was surprised at how quickly I was able to secure an offer for a job,” he said.

Wen Huber landed a job offer for a social media manager position within one-and-a-half months of his layoff.



Photo:

Devon Potts

Short job searches in tech have become slightly less common as the labor market slows from earlier in the year. Among people who recently lost a job and worked in tech previously, 37% found a new position within one month of starting to look, according to ZipRecruiter. That compared with 50% in February’s survey. 

“We’ve definitely seen a slowdown in hiring, but the reason why is that the job creation level was beyond record highs because of the slingshot effect of the pandemic,” said Ryan Sutton, district president at Robert Half, a global recruitment firm. “From August 2020 to May 2022, it wasn’t red-hot. It was lava-hot.”

Usually when mass layoffs hit, there is an influx of tech candidates contacting his company to help with their job search, Mr. Sutton said. 

“We have not seen it yet—we haven’t seen more candidates coming to market,” he said. “Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.” 

Client firms in tech also haven’t mentioned any plans to cut jobs, Mr. Sutton said. 

About 74% of workers recently hired after losing or leaving a job at a tech company remained in the industry, according to ZipRecruiter. Others who previously worked at tech companies switched to firms in industries such as retail, financial services and healthcare in the six months ending in mid-October. 

The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin

Pinnacol Assurance, a 650-person workers’ compensation insurer, saw a 46% increase in job candidates from big tech companies including Meta, Microsoft and Twitter between September and mid-December, said Tim Johnson, the company’s chief human resources officer.

The influx of applicants has helped Pinnacol fill tech-related roles such as data scientist, machine-learning engineer and cloud architect in recent months. In mid-December, Pinnacol’s recruiting team made an offer to a job candidate from Google, Mr. Johnson said.

Ayanna Chapman, 42, started a systems-engineering job job at Pinnacol overseeing its computer systems in mid-November after she was laid off from another systems-engineer position this spring. 

“‘Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.’”


— Ryan Sutton of global recruitment firm Robert Half

A generous severance package allowed her to take several months to freshen skills and study for certifications including in the Python programming language. When the Atlanta–area resident began looking for work in the second week of October, recruiters quickly reached out with interview opportunities, she said.

Ms. Chapman was keen on finding a job with stability and thought Pinnacol would fit. She received an offer from the Denver–based company about two weeks after beginning the interview process, much faster than previous experiences, she said.

“I literally cried tears of joy like, ‘Oh, my God, I got the job. I can’t believe it,’” Ms. Chapman said.

Employers broadly are responding to job candidates fast, likely for fear of losing them in a competitive market with a historically low jobless rate of 3.7%. Nine in 10 ZipRecruiter survey respondents said they heard back from a recruiter or hiring manager within a week of applying for a job.

ZipRecruiter’s most recent survey was drawn from 2,550 U.S. residents who had started a new job within the six months ending in mid-October. The data align with other job-market figures that signal the hot labor market is cooling. 

Of the ZipRecruiter survey respondents who said they previously worked in tech, most of them likely worked for tech companies regardless of their occupation, Ms. Pollak said. In other words, a recruiter at Amazon would likely be classified as a tech-industry worker in the survey. But a data scientist at

Home Depot

would be a retail-industry worker.

Separate labor-market figures suggest employers across industries are still seeking to hire tech workers, though less so than earlier in the pandemic. Postings on job-site Indeed for tech occupations are still well above prepandemic levels, but have fallen steeply over the past year. 

Software developer job ads on Indeed are down 34% from a year earlier, and ads for mathematics roles—which include data scientists—are 28% lower. Overall postings are down 7.7% from a year ago.

“With tech workers, it’s a much bigger pullback,” said

Nick Bunker,

an economist at Indeed Hiring Lab. “It’s still above prepandemic levels, but if the current trend keeps up, I don’t imagine that talking point will be true anymore at some point next year.”

The uncertain economic outlook is likely weighing on employers’ appetite for white-collar workers, since they tend to base hiring plans for higher-paid workers on the longer-term business outlook, said Mr. Bunker. By contrast, firms usually gear hiring for waiters, deliverers and other lower-paid jobs according to immediate business needs, he said.

Many companies with among the highest shares of new tech job postings on Indeed in late November were in industries such as consulting, financial services and aerospace.

“For tech jobs, it is still a relatively healthy economic climate and relatively healthy labor market,” said Scott Dobroski, Indeed career expert. “A lot of bright spots for tech workers currently lie outside of traditional tech companies.”

U.S. aerospace companies cut more than 100,000 workers during the pandemic, but have been hiring back at a fast clip and struggling for a year with staffing shortages that have crimped supply chains.

Raytheon Technologies Corp.

CEO

Greg Hayes

said during the summer he was optimistic that layoffs among tech companies would start to ease his own hiring challenges. There are signs that is happening.

“We are starting to see an uptick in interest from the tech layoffs,” said

Mike Dippold,

chief financial officer of

Leonardo DRS Inc.,

which is based Arlington, Va.

Mr. Dippold said the defense-sensor specialist, like many peers, still had more open positions than it would like, but the staffing situation was starting to improve.

—Doug Cameron contributed to this article.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and Gwynn Guilford at gwynn.guilford@wsj.com

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Business

Jobs Report Keeps Federal Reserve on Track for 0.5-Point Rate Rise

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Fed officials have warned in recent days that they are likely to lift rates to and hold them at levels high enough to slow economic activity and hiring to bring inflation down from 40-year highs.

The employment report showed continued strong hiring and brisk wage growth, which is a source of concern to Fed officials because they are trying to slow both trends to prevent higher prices and wages from growing embedded across the economy.

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Employers added 263,000 jobs in November and the unemployment rate held steady at 3.7%. But revised wage data released Friday could concern Fed officials because it points to an acceleration in pay gains in recent months.

For the three months through November, average hourly earnings rose at a 5.8% annualized rate, the Labor Department said Friday. That is up from an initially reported 3.9% annualized rate for the three months ended October.

At the same time, senior Fed officials have clearly signaled their expectation that they can cool the pace of rate rises at their Dec. 13-14 meeting, ending an unprecedented string of 0.75-point rate rises at their past four meetings.

The Fed raised its benchmark federal-funds rate last month to a range between 3.75% and 4%, and officials have signaled they are on track to continue raising it to at least around 5% by next spring.

Federal Reserve Chair Jerome Powell said at a Brookings Institution event that the central bank is prepared to slow the pace of rate rises as soon as its December meeting. Photo: Valerie Plesch/Bloomberg News

The Fed’s preferred inflation gauge, the personal-consumption-expenditures price index, rose 6% in October from a year ago. Excluding volatile food and energy categories, the so-called core PCE index rose 5%. Economists often look at core inflation as a better gauge of underlying price pressures. The Fed targets 2% inflation over time.

Current pay gains are around 1.5 to 2 percentage points above what would be consistent with the Fed’s 2% target, Fed Chair

Jerome Powell

said during a moderated discussion on Wednesday. 

“We want wages to go up. We want wages to go up strongly,” he said. “But they’ve got to go up at a level that is consistent with 2% inflation over time.”

Mr. Powell said it was possible prices that rose sharply over the last two years, including housing costs and goods such as used cars, could decline in the coming year. But he signaled concern that inflation might ease to levels that are still too high. “Despite some promising developments, we have a long way to go” in bringing down inflation.

Mr. Powell and several of his colleagues have said they don’t believe wage growth played the primary role in driving up prices. But they are concerned that strong demand for labor and high inflation could create conditions that lead paychecks and prices to move higher in lockstep, which economists sometimes call a wage-price spiral.

“When you get to that point, you’re in serious trouble,” Mr. Powell said Wednesday. “We don’t think we’re at that point. But it can’t be that we can go on for five years at very high levels of inflation and that doesn’t work its way into the wage- and price-setting process pretty quickly.”

Fed officials have signaled they are entering a new phase of raising interest rates after having lifted them at the fastest pace since the early 1980s. Now, they are trying to determine more carefully how high rates will need to go and for how long to lower inflation.

Mr. Powell outlined two possible strategies. One would be to quickly raise interest rates well above the 4.5% to 5% level that many officials thought in September would be appropriate. Another would be to “go slower and feel your way a little bit to what we think is the right level” and “to hold on longer at a high level and not loosen policy too early.”

Mr. Powell indicated he and his colleagues were more comfortable with the second strategy because they don’t want to cause unnecessary damage to the economy. “We do not want to over tighten because cutting rates is not something we want to do soon,” he said. “So that’s why we’re slowing down and going to find our way to what the right level is.”

Write to Nick Timiraos at Nick.Timiraos@wsj.com

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Business

November Employment Report Shows U.S. Economy Added 263,000 Jobs

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The November payrolls gain compared with an upwardly revised 284,000 jobs in October, the Labor Department said Friday. Payrolls grew in leisure and hospitality, healthcare and government. Retailers and transportation-and-warehousing companies cut jobs in a sign of weak holiday hiring.

Average hourly earnings grew 5.1% in November from a year earlier, the department said. Wage growth has remained elevated but roughly stable after a sharp increase earlier in the year.

November job growth was roughly in line with the previous three months, when payrolls grew an average of 282,000 a month. Job growth continues to exceed the 2019 monthly average of 164,000, though gains have slowed from the first half of the year.

The job market has remained resilient this year, with employers still seeking to hire despite an uncertain economic outlook and elevated recession fears. Low unemployment and wage gains have helped fuel consumer spending, the economy’s main engine.

One big question is how long that strength can last as the Federal Reserve aggressively raises interest rates to tame inflation. Some companies in technology, entertainment and real estate are laying off workers, but demand for workers continues to outpace the number of unemployed people looking for work.

Economists are concerned that higher interest rates will trigger more widespread layoffs and a recession in the next year, as has typically occurred during prior episodes of rapid rate rises. They are closely monitoring the pace of hiring for early signs of shifts in labor-market momentum.

“An employer is going to start reducing hiring long before they start letting go of their existing workforce,” said Guy Berger, principal economist at LinkedIn. “That’s the first lever.” 

Rising unemployment could follow, he said, as job seekers have fewer available opportunities. Continuing claims, which reflect the number of people seeking ongoing unemployment benefits, are drifting upward in a sign of labor-market cooling, Mr. Berger said. 

On Wednesday, Federal Reserve Chair

Jerome Powell

indicated the central bank is on track to raise interest rates by a half-percentage point at its next meeting, scaling back from an unprecedented series of four 0.75-point rate rises. Fed officials are hoping higher rates will trigger less competition for workers and slower wage increases, taking some pressure off consumer prices. 

This week, CNN said it was laying off employees and DoorDash Inc. said it would trim its corporate staffing levels by about 1,250. AMC Networks Inc. said in a memo to employees that it plans to lay off about 20% of its U.S. workforce. 

Corporate layoff announcements generally have been concentrated in the technology industry and sectors of the economy sensitive to interest rates such as housing and finance. Other businesses are quickly scooping up laid-off workers as job openings remain well above prepandemic levels, even in sectors such as real estate.

LodeStar Software Solutions, a small software company that helps mortgage lenders accurately disclose fees to consumers, recently posted an opening for a customer-service role, said Jim Paolino, chief executive of the Conshohocken, Pa.-based company.

Mr. Paolino quickly received about 130 résumés for the job, which entails account management. He held screening calls with 10 applicants, eight of whom had lost their jobs at mortgage companies. 

“It’s actually a great time to hire right now,” he said. “There has been an influx of talent in our industry and to the market because a lot of larger companies have done pretty large-scale layoffs.”

Companies are still largely avoiding job cuts because demand for goods and services is solid. Personal spending increased 0.8% from the prior month, the Commerce Department said Thursday. 

Some firms also are hesitant to lay off employees because they found it so difficult to rehire as the economy recovered from the pandemic downturn.

The layoff announcements just keep coming. As interest rates continue to climb and earnings slump, WSJ’s Dion Rabouin explains why we can expect to see a bigger wave of layoffs in the near future. Illustration: Elizabeth Smelov

“Demand restarted, and they couldn’t hire fast enough,” said

Becky Frankiewicz,

president and chief commercial officer of staffing firm

ManpowerGroup.

“There’s still this aftershock of, ‘I want to hold on to the talent that I have.’”

Companies are still offering hiring bonuses to attract talent, but the rationale has shifted some from a year ago. Employers are expecting inflation to come down and bonuses give them more flexibility to dial back compensation than wage increases do, she said. 

“If you still have a talent shortage and you don’t want to lock in at higher wages across all your roles, what do you do? You do bonuses,” Ms. Frankiewicz said.

Wage growth has cooled in recent months but remains above the prepandemic pace.

Still, there are signs that spending could be reaching a limit, with some Americans dipping into savings or taking on credit-card debt to finance purchases. The personal-saving rate was 2.3% in October, its lowest level since 2.1% in July 2005.

David Blake, president of Iowa-based Blue-9 Pet Products, said sales have been roughly flat this year, a shift from previous years when the 10-person manufacturer and seller of dog-training accessories posted double-digit sales growth. 

Pet owners appear to be cutting back on some discretionary purchases as they face higher prices for staples like groceries, he said.

“Whether we’re in a recession or going to have a recession or not, the fact still remains that the inflation out there is having an impact on spending,” said Mr. Blake.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com

Due to slower sales, Mr. Blake held off on hiring new employees this year. He also doesn’t plan to add any next year.

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Business

August Jobs Report Shows U.S. Added 315,000 Jobs

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The tight U.S. labor market loosened some in August as employers hired fewer workers, more people sought work and wages rose at a slower pace.

Employers added 315,000 jobs last month, down from the prior month’s revised 526,000 jobs, the Labor Department said on Friday, with new jobs spread across the economy. The deceleration marked a pullback from robust gains that characterized much of the past two years. Still, job growth remained well above the prepandemic trend.

“The labor market is still very strong,” said Rhea Thomas, senior economist at Wilmington Trust, adding the August report “shows an initial step towards some cooling of what has been a very tight labor market.”

The jobless rate rose to 3.7% in August from a half-century low of 3.5% the prior month. The increase in the unemployment rate reflected more workers entering the labor force. The share of adults working or seeking a job rose to 62.4% in August from 62.1% in July, as participation among women ages 25 to 54 jumped to the highest level since 2000.

The rise in labor-force participation—along with other signs such as lower average weekly hours worked—suggested employers are finding it easier to hire. That could help ease wage pressures in the coming months. The Federal Reserve is closely watching the health of the labor market and wages trends, an important factor in the outlook for inflation.

Average hourly earnings rose 5.2% in August from a year earlier, in line with the previous month and down from a recent peak of 5.6% in March. Wages rose 0.3% in August from a month earlier, down from July’s increase.

The figures keep the Fed on track to raise interest rates by either 0.5 or 0.75 percentage point at its meeting later this month to combat high inflation.

Stocks turned lower Friday after an initial surge following the release of the August jobs figures, and Treasury yields fell.

“In all, the data suggest labor market conditions are beginning to slow more markedly, which we expect will contribute to weaker economic growth over the coming years,” said

Michael Pearce,

senior U.S. economist at Capital Economics.

Some signs point to an economy that is rapidly cooling under the weight of high inflation. The Fed is raising interest rates to slow the economy and curb price increases. Some major employers, including

Ford Motor Co.

, Snap Inc.,

T-Mobile US Inc.

and

Wayfair Inc.,

have announced job cuts in the past few weeks. Gross domestic product shrank in both the first and second quarters of the year, according to the Commerce Department.

This year’s tight labor market followed steep pandemic-driven job cuts in early 2020 that left the U.S. economy with about 22 million fewer jobs. As employers clawed those jobs back, payrolls grew by a monthly average of about 800,000. Now that payrolls are slightly above their prepandemic peak, rehiring is set to fade as a source of job growth in many sectors, according to economists.

Leisure-and-hospitality might be an exception. The industry—which includes restaurants, bars and hotels—was particularly hard hit by shutdowns earlier in the pandemic and continues to recoup jobs lost in early 2020.

Unemployment rates rose last month across racial groups and ethnicities, with particularly large increases among Black and Hispanic workers. Fewer Black adults were working or seeking a job in August.

Job growth remains historically strong as the labor market holds up better than many other parts of the economy. Hiring remained solid last month in interest-rate sensitive sectors such as construction and manufacturing. Job gains were strong in professional and business services, healthcare and retail.

In Winston-Salem, N.C., Jennifer Coulombe has yet to see any indication of softening labor demand. Ms. Coulombe, an associate vice president at Forsyth Technical Community College, said graduates have little trouble finding a job. “We are now at a point where employers are knocking on our doors begging us for students,” she said.

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One of the school’s recent graduates, Stephen Hendrix, 20 years old, started working while in college as an apprentice for a firm manufacturing furniture-door hinges and drawer slides. The company paid him for the hours he worked and those he spent in class.

By the time he graduated with an associate degree, he was making $18 an hour. After graduation, his pay jumped to $23 an hour.

“I was honestly kind of surprised,” he said. Now Mr. Hendrix is saving up to buy land on which to build a house.

The job market could weaken in the coming months, as the Fed tries to tame inflation that is running near a four-decade high. Fed officials have raised their benchmark interest rate by 0.75 percentage point at each of their past two meetings.

Higher interest rates are intended to make it more expensive for people and businesses to borrow and spend money, which could lead to slower economic growth and an easing of price pressures.

Fed Chairman

Jerome Powell

warned in late August that the Fed’s moves would hurt the labor market and the overall economy.

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said.


Professional and business services

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Education and health services

Professional and business services

Trade, transportation and utilities

Education and health services

Professional and business services

Trade, transportation and utilities

Education and health services

Professional and

business services

Trade, transportation

and utilities

Education and

health services

Professional and

business services

Trade, transportation

and utilities

Education and

health services

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and David Harrison at david.harrison@wsj.com

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Business

China Growth Slows Across All Fronts in July, Prompting Unexpected Rate Cut

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SINGAPORE—China’s economy stumbled in July as a two-month boost from easing lockdowns faded, prompting the country’s central bank to unexpectedly cut two key interest rates in an effort to shore up faltering growth.

A raft of data released Monday showed economic activity slowed across the board in July, including factory output, investment, consumer spending, youth hiring and real estate, highlighting the breadth of the economic challenge facing policy makers in a politically sensitive year for leader

Xi Jinping,

who is expected to break with recent precedent and seek a third term in power this fall.

The fresh evidence of China’s slowdown adds to the headwinds facing the global economy this year, which is already reeling from the fallout from Russia’s invasion of Ukraine and efforts by central banks in the U.S., Europe and beyond to tame rocketing inflation by jacking up borrowing costs.

The world’s second-largest economy is straining under the effects of Beijing’s zero-tolerance approach to Covid-19 and a deflating property bubble, which have triggered protests and mortgage-payment strikes in several provinces and cities. Consumers are reluctant to spend and businesses are wary of investing, a consequence of the “humongous uncertainty about the future,” said

Alicia García-Herrero,

Asia-Pacific chief economist at investment bank Natixis in Hong Kong.

One stark sign of China’s economic malaise: One in five Chinese youth, or 19.9%, was unemployed in July, Wednesday’s figures showed, the highest level since China started publishing such data in 2018.

On Monday, the People’s Bank of China cut by 0.1 percentage point two key interest rates and pumped the equivalent of $59.3 billion into the financial system to rev up lending and wider economic growth. The unexpected move marked a small step toward more support for China’s economy, and may foreshadow further cuts to borrowing costs in the months ahead, some economists said.

Job seekers lining up in Shanghai.



Photo:

Cfoto/Zuma Press

But overall, officials have signaled they are unpersuaded by the need for more forceful policy action, mindful of risks such as rising inflation and ballooning debt. Senior Chinese leaders have effectively dropped a growth target of around 5.5% for the year, and the question now for many economists is just how feeble growth is likely to get.

Data released by China’s National Bureau of Statistics Monday showed industrial production rose 3.8% from a year earlier in July, easing from a 3.9% year-over-year increase in June and well short of the 4.5% growth expected by economists polled by The Wall Street Journal.

Factory output and exports have been a bright spot for Chinese growth for the past two years, especially after production resumed and supply-chain kinks were worked out following the lifting of lockdowns imposed in the spring to contain Covid-19. But economists have long expected demand for Chinese goods to begin to fade as consumers in the West feel the pinch from rising prices and interest rates.

Retail sales, a key gauge of consumer spending, grew 2.7% from a year earlier in July, a weaker reading than the 3.1% recorded in June and the 5.0% increase expected by surveyed economists.

Growth in retail sales in July was little more than half what economists expected.



Photo:

Qilai Shen/Bloomberg News

Consumer confidence has been rocked by the threat of repeated lockdowns and China’s property bust. Separate data released Monday showed new home prices posted their steepest year-over-year decline in more than six years in July, highlighting the strain in the real-estate market after a yearlong regulatory squeeze that has hit sales and led to stalled projects and developer defaults.

Average new-home prices in 70 major cities fell 1.67% in July from a year earlier, compared with June’s 1.29% decrease, according to Wall Street Journal calculations based on data released Monday by China’s statistics bureau.

On a month-on-month basis, average new-home prices fell for an 11th consecutive month. Prices dropped 0.11% in July from June, widening from the previous month’s 0.10% decline, the statistics bureau said. Only 30 of the 70 cities recorded a month-over-month increase in home prices in July, down from 31 cities in June.

Officials have pinned their hopes for an economic revival this year on lavish government spending on infrastructure, but data so far suggest the benefits of that push have been limited, likely reflecting financing strains on the provincial governments tasked with implementing the policy, economists say. Fixed-asset investment slowed in July, rising 5.7% on year in the January-July period, compared with the 6.1% pace recorded in the first half of the year. Economists had expected growth of 6.2%.

The unemployment rate for those age 16 to 24 rose to 19.9% in July, from 19.3% in June, setting a record. The overall jobless rate edged down, however, to 5.4% from 5.5%.

Senior Chinese Communist Party officials announced no new fiscal stimulus measures at a meeting late last month and pledged to stick with their zero-tolerance approach to managing Covid outbreaks, while appearing to drop their official goal of increasing gross domestic product by around 5.5% this year. Many economists expect China to record growth of around 3% to 4% in 2022.

—Grace Zhu and Bingyan Wang in Beijing contributed to this article.

Write to Jason Douglas at jason.douglas@wsj.com

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Business

Worker Pay and Benefits Rose 1.3% in Second Quarter

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Worker pay and benefits are rising this year at the fastest pace on record, keeping pressure on historically high inflation.

Business and government employers spent 5.1% more on compensation for workers in the second quarter compared with the same period a year earlier, without adjusting for seasonality, the Labor Department said Friday. That marked the fastest annual pace on records back to 2001, eclipsing the 4.5% annual increase in the first quarter.

Wages and benefits for civilian workers increased a seasonally adjusted 1.3% in the second quarter, a slight slowdown from record-high growth of 1.4% in the first quarter as employers pulled back on benefits this spring. Wages and salaries for private-sector workers accelerated, growing 1.6% in the spring versus 1.3% during the first three months of the year.

The growth in compensation shows that employers continued to seek workers and increase wages in a historically tight job market, even as the economy shrunk in the second quarter.

“The rest of the economy might be slowing down, but wages are speeding up,” said

Nick Bunker,

economist at jobs site Indeed. “Competition for workers remains fierce as employers have to keep bidding up wages for new hires.”

A separate Commerce Department report Friday showed consumers boosted their seasonally adjusted spending by 1.1% in June, up from a revised 0.3% increase in May. Personal income rose by 0.6% last month.

The report showed that inflation as measured by the Federal Reserve’s preferred gauge, the personal-consumption expenditures price index, rose 6.8% in June from the year before, up from the 6.3% increase in the 12 months through May.

Economists say the latest employment-cost figures are a discouraging sign for Federal Reserve officials as they try to bring four-decade high inflation down to their target of 2%. Companies often pass on price increases to consumers to compensate for higher labor costs.

On Wednesday, the Fed lifted its benchmark interest rate to a range between 2.25% and 2.5%.

“The Fed is closely tracking the data for signs of a wage-price spiral,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a note, describing when rising prices cause workers to demand higher wages, which in turn causes companies to raise prices. “These readings, which are showing no sign of easing, will only strengthen the Fed’s resolve to keep moving interest rates higher.”

Richard Moody, chief economist at

Regions Financial Corp.

, thinks wage growth will cool only gradually because employers are competing for a limited pool of workers. Job openings, at 11.3 million in May, have held well above prepandemic levels, and there are fewer workers seeking jobs than before Covid-19 took hold in the U.S.

Workers are also changing jobs at high rates. That dynamic is contributing to wage growth, as job switchers tend to reap bigger pay increases and put pressure on employers to raise pay for existing employees.

Jerry Pugh,

who owns 15 locations of suburban Atlanta-based gym franchise Workout Anytime, said many long-term employees have left for other industries or higher pay over the past year and a half, keeping the gyms in constant hiring mode. Mr. Pugh said the facilities need general managers, sales staff, personal trainers and fitness directors.

Workout Anytime gyms are dealing with staff turnover and higher wages—factors also affecting employers in other industries.



Photo:

Kevin C. Cox/Getty Images

“You can still get quality employees, but the price you’re having to pay is much higher than it was before Covid,” said Mr. Pugh. “Everybody wants more money than they’ve ever wanted.”

Mr. Pugh’s gyms are paying higher commission rates to personal trainers than a year ago, and they also are paying trainers $12 to $14 an hour for “floor hours,” in which they try to pull in new members for their services. That is up from an hourly rate of $10 a year ago. The gyms recently started offering other incentives, including paying for some high-performing employees’ personal-training or nutrition certifications.

To offset some of the higher labor costs, the gyms raised rates for new members by 99 cents a month at the end of last year. The basic monthly membership price is now $19.99. Mr. Pugh said the company is weighing another price increase.

Workers’ wage gains are largely falling behind inflation. Adjusted for inflation, private-sector wages and salaries fell 3.1% in the second quarter from a year earlier.

Wages for leisure and hospitality workers started surging last year as restaurants, bars and hotels reopened and struggled to find workers. There are signs that wage growth in the sector remains strong but is cooling as more workers trickle into the labor force.

Carrols Restaurant Group Inc.,

which operates more than a thousand Burger King locations and dozens of Popeyes restaurants, is seeing some slight easing of wage pressures. Average hourly wages for team members increased 13.6% from a year earlier in the company’s fiscal first quarter, compared with 14.2% in the fourth quarter, said

Anthony Hull,

chief financial officer of the Syracuse, N.Y.-based company.

“Hiring pressures are stabilizing as we are seeing an increase in application flow,” Mr. Hull said in an earnings call in May. The company has paid more to team members who acted as managers by opening and closing the restaurants. Mr. Hull said he expects those cost pressures to cool as turnover among managers declines.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com

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Business

U.S. Stocks Slide After Jobs Report

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U.S. stocks dropped Friday after the latest employment report showed the U.S. labor market added jobs at a strong but slower clip in May.

The S&P 500 slipped 1% in morning trading, while the Dow Jones Industrial Average fell 156 points, or 0.5%, and the Nasdaq Composite declined 1.7%. All three indexes are on track for weekly declines.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 2.973% from 2.914% Thursday. Yields and prices move inversely. 

U.S. employers added 390,000 jobs last month, the slowest pace of growth since April of last year, while the unemployment rate remained 3.6%. Wages grew 5.2% on the year, down from 5.5% in April.

Economists surveyed by The Wall Street Journal expected employers added 328,000 jobs last month. And they saw the unemployment rate falling slightly to 3.5%, which would have matched a 53-year low and its level in February 2020 before the Covid-19 pandemic became widespread in the U.S.

Federal Reserve officials are closely monitoring the state of the labor market as they decide how much and how quickly to raise interest rates in the coming months. 

One point of concern for officials is that a strong labor market will add to elevated inflation as competition for workers boosts wage-bargaining power. Fed Vice Chairwoman

Lael Brainard

said Thursday that she supported plans to raise interest rates by a half-percentage point at a meeting later this month and again in July. 

Frank Øland, global chief strategist at Danske Bank, said ahead of the report that he would be looking to see whether wages grew last month. That—plus a slowdown in hiring—could cause markets to falter, he said. 

“That’s an unfortunate cocktail,” he said. “Then we have inflation getting more broad-based, and then the Fed will continue to tighten.”

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates over high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

Shares of

Tesla

fell 7% after Reuters reported that Chief Executive

Elon Musk

is looking to cut staff at the electric-car maker. Mr. Musk earlier this week told employees to return to the office or seek employment elsewhere. 

Markets have experienced heightened volatility in recent months as investors have tried to assess a mix of variables that has clouded their outlook and added to fears of a recession.

In the past two weeks, though, some of the choppiness has eased. 

Justin Wiggs, managing director in equity trading at Stifel Nicolaus, said in the past week or so he has seen the number of buy orders among his clients ticking up, something he believes directly correlates with fewer big stock-market swings. 

Wall Street’s fear gauge, the Cboe Volatility Index, is trading in the mid-20s again, and the VVIX, a measure of how volatile the VIX itself is, is trading at its lowest level in two years. The VVIX is based on options prices on the volatility index.

“That the swings are getting less bad has given some people solace in the idea that maybe they can put money back to work,” said Mr. Wiggs.

A tightening of financial conditions by the Fed might damp inflation but also risks weighing on growth and the housing market. Russia’s war against Ukraine and China’s zero-Covid policy have added to supply-chain disruptions, further stoking inflation.

Oil prices also remain above $100 a barrel, adding to the cost of energy and fuel. Futures for Brent crude, the global oil benchmark, edged up 0.4% to $118.08 a barrel. 

“You have a really strong U.S. economy now but we have this really high inflation not coming down,” Mr. Øland said. “Eventually that will bring consumers to a point where they might say let’s look at our budget and maybe tighten a bit here and there. If everyone holds back a bit, you’re moving toward recession.”

Overseas, the pan-continental Stoxx Europe 600 was roughly flat. Markets in the U.K., Hong Kong and China were closed for holidays. Japan’s Nikkei 225 closed 1.3% higher, while South Korea’s Kospi added 0.4%.

Traders working on the floor of the New York Stock Exchange.



Photo:

Michael Nagle/Bloomberg News

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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Business

Stocks Waver After Jobs Report, Tech Selloff

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U.S. stocks were mixed after the January jobs report beat expectations, putting investors on edge about the path of monetary tightening by the Federal Reserve.

The S&P 500 opened flat. The tech-focused Nasdaq Composite gained 0.6%, and the Dow Jones Industrial Average fell 0.3%.

U.S. payrolls grew by 467,000 in January, the Labor Department said Friday. Economists surveyed by The Wall Street Journal had expected a gain of 150,000.

Major indexes Thursday saw losses after megacap technology companies helped drag the market down.

Facebook

owner Meta Platforms in particular plunged after a disappointing earnings report.

Amazon.com

shares rallied 12% premarket after the e-commerce giant said profit nearly doubled in the critical holiday period, as the company controlled labor and supply costs better than expected and saw gains in its cloud-computing and advertising businesses.

Sharp moves in the share prices of large technology and social-media companies have an outsize impact on broader indexes. Amazon.com had a 3.3% weighting on the S&P 500 as of Wednesday, according to data from S&P Dow Jones Indices. Meta, whose shares tumbled Thursday, had a 2% weighting. 

Global markets have been highly volatile in recent weeks.



Photo:

Allie Joseph/Associated Press

“Those companies which have continued to deliver strong results have held up relatively well,” said

Mike Bell,

global market strategist at J.P. Morgan Asset Management. “Those companies which were priced as heavily valued growth stocks, but then under-delivered, are getting hit extraordinarily hard.” 

Snap shares surged about 39% premarket after the social-media company posted its first quarterly profit and signaled it is adjusting to disruptions in the digital-advertising market caused by

Apple

privacy policy changes that are affecting Meta.

Pinterest

jumped about 7% premarket after it reported its first full-year profit and more than $2 billion in annual revenue.

However,

Clorox

shares tumbled 15% premarket after the maker of disinfectant wipes and other cleaning products reported earnings that missed analysts’ expectations and said margins would take a steep hit from continued cost pressures.

Ford Motor

shares declined more than 6% premarket after the auto maker posted earnings that fell short of Wall Street forecasts.

The monthly jobs report reveals key indicators about the labor market and the overall state of the economy, but it doesn’t show the entire picture. WSJ explains how to read the report, what it shows and what it doesn’t. Photo illustration: Liz Ornitz

In bond markets, the yield on the benchmark U.S. 10-year Treasury note climbed to 1.886% after the release of the jobs report, versus 1.825% Thursday. Yields and prices move inversely. Oil prices climbed, with global benchmark Brent crude up 1.8% at $92.77 a barrel, due to supply tightness and a winter storm in the U.S. that may disrupt production.

International markets have been volatile in recent weeks, and on Friday, the pan-continental Stoxx Europe 600 fell 1%. Markets have been rattled by the increasingly hawkish tone from global central banks. On Thursday, the Bank of England raised borrowing costs again, while the European Central Bank kept its key interest rates unchanged, but signaled concern about inflation and opened the door to a possible rate rise this year.

Annual inflation in the eurozone rose to a record 5.1% in January, more than double the ECB’s target. Some investors are betting on future rate rises to curb inflation, and are selling government bonds, pushing the yield on Italy’s 10-year debt up to 1.718% Friday, from 1.650% Thursday. In a sign of rising risk aversion, the spread between benchmark Italian and German government bond yields rose to its highest level since July 2020.

The Federal Reserve has also set the stage for a series of rate increases in 2022, leading investors to shift toward investments that are deemed safer, such as stocks of companies that pay regular dividends.

The market volatility could continue until the Fed implements its first interest-rate increase and investors get used to the idea of rising rates, said

Peter Andersen,

founder of Massachusetts-based investment firm Andersen Capital Management. 

“The fact that everything is sold off wholesale is really, in my opinion, a buying opportunity,” Mr. Andersen said. “Every investor is so spooked now, and nobody really has a compass to figure out where exactly we are in this cycle.”

Since the start of this year, the Nasdaq Composite has lost more than 11%, while the S&P 500 has slid 6.1%. The Dow, in comparison, has fallen 3.4%.

In Asia, stocks in Hong Kong resumed trading Friday following a three-day holiday closure. The Hang Seng Index added 3.2%, led by gains in banking and technology stocks. Japan’s Nikkei 225 index rose 0.7%.

—Caitlin McCabe contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

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