Robert Half International Inc RHI shares rallied 4.1% on Friday after the staffing company reported strong fourth-quarter numbers, but its earnings call commentary suggested global labor markets were still very imbalanced.
"Global labor markets remain tight and the demand for talent remains high, despite continued economic uncertainty," Robert Half CEO Keith Waddell said on the call.
"Although recent metrics have come off all-time highs, talent shortages persist."
Why It's Important: Despite concerns over a slowing economy, the Labor Department reported earlier this month the U.S. added another 223,000 jobs in December, bringing the unemployment rate down to just 3.5%, a 50-year low.
This tight labor market had kept wage growth elevated, including a 4.6% increase in wages in December. Some economists and analysts were concerned the tight labor market would make it difficult for the Federal Reserve to navigate a soft landing in 2023.
Waddell said the labor market was even tighter for skilled jobs that require educated workers. The unemployment rate among U.S. workers with a college degree is only 1.9%.
Meanwhile, job openings and resignation rates remain elevated and unemployment claims are low.
"Similar reports across the globe also point to labor market resilience," Waddell said.
Bank of America analyst Ethan Harris said earlier this week that the Fed will likely not stop raising interest rates until the job market normalizes with a higher unemployment rate, fewer job openings and healthy hiring and firing numbers.
One reason the labor market was so tight was that companies appeared to be "hoarding" workers by delaying layoffs until they are absolutely certain the economic slowdown was more than just a brief dip, Harris said.
Benzinga's Take: The bond market was pricing in two more rate hikes in the cycle, a 0.25% hike in February and another in March.
If Harris' prediction was correct and the labor market doesn't normalize, interest rates could rise even higher throughout the year, pressuring earnings and likely weighing on the SPDR S&P 500 ETF Trust SPY.
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