LinkedIn's Data Show Job Slowdown?

Key Concepts

• US Labor Market Slowdown: A general trend of cooling hiring and job growth.
• Hiring Momentum: The rate at which companies are hiring new employees.
• Quit Rate: The percentage of employees voluntarily leaving their jobs.
• Tech Sector Layoffs: Reductions in workforce specifically within technology companies.
• AI Impact on Jobs: The potential influence of Artificial Intelligence on employment.
• Healthcare Industry Hiring: Strong job growth in the healthcare sector.
• Manufacturing Slowdown: Reduced hiring and activity in the manufacturing sector.
• Ghost Jobs: Job postings that are not actively being filled or are used for candidate pipeline building.
• Job Postings vs. Hiring: The discrepancy between the number of advertised jobs and the actual number of hires.
• Job Seeker Competition: The level of competition among individuals seeking employment.
• Network Reliance: The importance of professional networks for job searching.
• Cyclical Trends: Recurring patterns in economic activity, including labor market fluctuations.
• Non-Farm Payrolls: A key economic indicator of job growth in the US.
• Government Data Availability: Challenges in accessing official economic data due to government shutdowns.
• LinkedIn Data Sources: How LinkedIn utilizes member profiles and hiring activity to track labor market trends.
• AI Capital Expenditures: Significant investment in AI technology and related infrastructure.
• AI Aptitude/Literacy: The growing importance of AI-related skills for job seekers.
• Skill Evolution: Changes in the skills required for various jobs.

State of the US Labor Market

The US labor market is currently exhibiting signs of a slowdown, characterized by major layoffs and economic uncertainty. While hiring and quit rates have slowed, the overall labor market is described as "holding up pretty steady." However, this is in the context of a pre-existing cooling trend that began in the summer and intensified in September. Hiring on LinkedIn is down approximately 24% compared to pre-pandemic levels, indicating that the market is already "pretty cool."

AI and Sector-Specific Pressures

Recent layoffs in the tech sector are viewed as more specific to that industry rather than a broad economic signal. LinkedIn data does not show a significant impact from AI on hiring at this time. While some hiring may be held back, particularly for roles like software engineers and in technology, these sectors are not recovering rapidly but are "holding pretty steady" since late 2023. The primary driver of the current labor market conditions is the macroeconomy, not AI.

Industry Hiring Trends

Robust Hiring: Healthcare

Healthcare is identified as the most robust industry for hiring on LinkedIn, with hiring levels on pace with pre-pandemic figures. Data from the Bureau of Labor Statistics (BLS) for the current year indicates that 80% of job additions have come from healthcare and social services, highlighting its significant momentum.

Slowing Down: Manufacturing

Manufacturing is experiencing a continued slowdown. This is attributed to reduced demand for goods, which is expected to persist until interest rates begin to drop. The upcoming holiday season will provide a crucial indicator of consumer purchasing behavior and its impact on manufacturing momentum heading into the next year.

Ghost Jobs and Job Posting Discrepancies

There has been a renewed conversation around "ghost jobs," referring to the divergence between job postings and actual hiring. While this divergence has existed over the last few years, it has started to come into alignment as job postings have declined this year. This suggests that employers may be posting jobs but not actively recruiting, or they are leaving them up to gather information about potential future candidate pipelines.

Navigating a Competitive Job Market for Job Seekers

The calculus for job seekers has shifted significantly. The number of job postings available per applicant has decreased considerably, returning to pre-pandemic levels after doubling during the "great reshuffle" at the peak of the labor market in 2022. This indicates a tougher job market with increased competition. Job seekers are now working more intensely, with the number of applications per applicant nearly doubling compared to pre-pandemic times.

Strategies for Job Seekers:

1. Leverage Your Network: Relying on one's professional network on LinkedIn is paramount for information and opportunities. This is the primary source of information for LinkedIn members, even before friends or family.
2. Understand Industry Trends: Job seekers should be aware of which industries are hiring, which are slowing down, and where investments are being made. This knowledge can help identify areas where hiring is likely to rebound.

Surprising Trends in Job Seeking

A surprising observation in the current data is that despite the discourse around AI in job applications, the number of applications per applicant has remained relatively stable over the past year. This suggests that while individuals may be completing more applications, the initiation of applications has been consistent. The idea of people "flooding" employers with applications might be a reflection of ongoing efforts from before the widespread adoption of generative AI, which are now being completed as these tools evolve.

Cyclical Slowdown vs. Economic Shift

The month-over-month labor slowdown observed in October is viewed as an ongoing part of cyclical trends. The economy is in a "regime of slowdown," which is described as moderate rather than rapid. This slowdown has been moderating since late 2023, and similar moderation has been seen in non-farm payrolls. The labor market has substantially moderated, and a significant slowdown is unlikely unless there are changes in the macroeconomy.

LinkedIn's Data Reliance Amidst Government Data Gaps

Given the current scarcity of official government economic data (e.g., PCE, CPI, PPI) due to factors like government shutdowns, LinkedIn relies on various internal data sources.

LinkedIn Data Sources:

• Member Profiles: Updates to member profiles indicate hiring events, which are tracked over time.
• Hiring Metrics: This is the primary metric for understanding job additions and labor market momentum.
• Job Seeking Activity: Tracking the volume of job postings relative to applicants helps gauge labor market competitiveness. A high number of job postings with fewer applicants signifies more opportunities for job seekers.

LinkedIn views its data as complementary to official government statistics. The reopening of government agencies and the resumption of data collection by the BLS are considered positive developments.

Key Trends to Watch for 2026

AI's Growing Influence

Artificial Intelligence (AI) is a critical trend to monitor as it is becoming a significant driver of economic growth. Substantial capital expenditure is being directed towards AI technology, with current spending comparable to the GDP of New Zealand on AI-related capital expenditures. While broad evidence of job displacement due to AI is not yet apparent, it is an area of concern and close observation.

Evolving Skill Requirements

The future job market will increasingly require AI competency. LinkedIn data shows a threefold increase over the last three years in members adding AI aptitude and AI literacy skills. The evolution of skills required for jobs is a crucial precursor to potential displacement. Often, changes in required skills precede innovations that might move workers around.

Conclusion

The US labor market is in a period of moderate slowdown, driven by macroeconomic factors rather than AI. Healthcare remains a strong hiring sector, while manufacturing is experiencing a downturn. Job seekers face increased competition and should prioritize leveraging their networks and understanding industry trends. While AI is not currently a major disruptor of the labor market, its growing influence and the evolving skill requirements for jobs are critical trends to watch as the economy moves forward. LinkedIn's proprietary data provides valuable insights into these dynamics, complementing official government statistics.