Labor markets are holding tight, despite fears of a global recession

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This month's top takeaways:
  • The U.S. labor market is starting to normalize with a slowdown in hiring, quits and wage growth. In contrast, labor markets in Europe appear structurally tighter than that of the U.S.
  • LinkedIn feed posts mentioning "layoffs," "recession," and "open to work" increased over the past few months, reflecting widespread workforce reductions in several industries.

  • Labor market conditions vary across industries. The industries where it’s toughest to find talent are accommodation, hospitals and healthcare, and oil and gas, while in government administration and consumer services, employers are swimming in quality applicants.

  • Technology, information, and media workers have become more averse to leaving their field despite heightened distress in the industry.

Global economic outlook

The global economy is poised to slow this year, before rebounding in 2024

Economic activity will remain weak as the fight against inflation and Russia’s war in Ukraine weigh on growth. Despite these headwinds, the outlook is less gloomy than previously predicted, and could represent a turning point, with inflation declining and growth bottoming out.

  • In the U.S., continued macroeconomic policy tightening to contain inflationary pressures this year is envisaged to compound the lagged effects of substantial interest rate increases in 2022 and further weigh on U.S. activity.

  • In the euro area, economic growth is forecast to resume in 2023, as inflationary pressures ease and investment rebounds, and to continue at a moderate pace thereafter.

  • The United Kingdom is beginning 2023 on the brink of a recession (or perhaps already in one) as households and businesses come under intense pressure from soaring costs of food, energy and other basic essentials.

  • Compared to the rest of the world, APAC is not slowing down as much; however the global headwinds will still create downside on growth in the region. Unemployment rates are at historical lows across many countries, which provides some buffer for a cooling labor market. The recovery of tourism and travel during the December and January seasons are expected to be outweighed by dissipating pent-up demand and declining exports.

  • The economies of the Gulf Cooperation Council (GCC) ended 2022 on a high note, wrapping up the strongest year in terms of GDP growth in more than a decade. The outlook for the region remains positive, although we anticipate growth to shift into a lower gear in 2023. The energy sector in GCC is expected to barely grow this year following double digit expansion in 2022. High interest rates will weigh on private sector investments, and recessions in other parts of the world will also be a drag on non-oil GDP growth.

Hiring eased further across the world amidst economic uncertainty

Relative to January 2022, hiring was down across almost all countries making it harder for some of those hoping to swap their current jobs for a new one this year to find a suitable role. This was most pronounced in Ireland  (-27.2%), India (-25.1%), and Singapore (-24.6%). Hiring has also declined in the U.S. as companies have started to tighten their belts and take a more judicious approach to recruiting.

What is notable about the strong pullback in hiring that we’re seeing in 2023 is a painful recalibration in sectors that did particularly well in 2021 and late 2022. For example, there was this big rise in hiring appetite for the technology, information, and media sector, and now things are swinging the other way in almost every country.

Labor markets across a range of economies are cooling rapidly

Across all countries, we are seeing signs of meaningful cooling in labor markets (though from a very strong base) as the Federal Reserve and other central banks continue to hike interest rates to bring down record levels of inflation. Job openings on LinkedIn have slowed down considerably in January 2023, but still above pre-pandemic levels. Additionally, the number of applicants competing for these jobs has been going up—some of which are looking for new positions largely in search for better pay, and others who are coming back to the labor market after a short break or a recent layoff.

While the ratio of job openings to active applicants, LinkedIn’s measure of labor market tightness, appears to be slowly drifting back to its pre-pandemic normal in some markets, including Canada, Ireland, UAE, UK, and the U.S., it remains structurally tight in several European countries, including Germany, and the Netherlands.

Against this backdrop, there is also cause for optimism

While hiring is slowing globally and labor markets are cooling, LinkedIn data shows that there are bright spots in the labor market where new job opportunities have opened up in recent years. Challenges presented by climate change, cyber threats and the need to drive business growth are creating opportunities for candidates with the right skills.

Our Jobs on the Rise data shows roles in areas such as cyber security and sustainability are among the fastest-growing jobs. Sales professionals are also in high demand, as businesses grapple with the need to deliver growth amidst challenging macroeconomic circumstances. Sustainability roles are featured in the Jobs on the Rise lists in 13 countries, ranging from Australia, Brazil, France, Germany, India, Saudi Arabia, the United Kingdom and United States.

Even without a definitive recession, job seekers are feeling the slowdown

An analysis of LinkedIn’s feed posts point to a noticeable increase in the number of people mentioning “layoffs,” “recession,” and “open to work.” This trend is a reflection of workforce reductions in many industries and the ongoing economic uncertainty.

Posts mentioning “recession” increased by 7.7% in the last 4 weeks December 26, 2022 to January 22, 2023 compared to the 4 weeks prior, and is up 184% compared to April 4 to May 1, 2022 when economic uncertainty began to grow.

Posts mentioning “layoff” or “retrenchment” increased by 37.7% in the last 4 weeks December 26, 2022 to January 22, 2023 compared to the 4 weeks prior, and is up 165% compared to April 4 to May 1, 2022 when economic uncertainty began to grow. The last week January 16 to 22 had the most posts mentioning “layoffs” in a single week since the data was captured starting in July 2021.

Finally, posts mentioning “open to work” increased by 18.5% in the last 4 weeks December 26, 2022 to January 22, 2023 compared to the 4 weeks prior, and is up 30.9% compared to April 4 to May 1, 2022 when economic uncertainty began to grow.

U.S. labor market overview

Despite widespread reports of layoffs hitting different sectors, the U.S. labor market remains robust and resilient. Although the pace of job creation slowed, monthly job gains remain elevated and above pre-pandemic norms. Layoffs are also at a relatively low rate by historical standards and the headline unemployment rate is below the pre-pandemic, half-century low of 3.5 percent. Hiring continues to slow down from the record highs we’ve seen last year. Across the U.S., hiring on LinkedIn was 0.7% percent lower in January 2023 compared to December, and is down 23% compared to January 2022.

What the data is telling us

On the one hand, layoffs in the technology, information, media and financial sectors seem to signal trouble ahead for the labor market. On the other hand, key indicators point to a job market that is holding up pretty well. The unemployment rate fell to 3.4% in January 2023, the lowest since 1969. The share of prime-working-age Americans (arguably a superior measure to the unemployment rate) is just a little below where it was pre-pandemic.  There are also very few people filing for unemployment benefits on a weekly basis, with no notable uptick.

However, there is evidence that the labor market is cooling, beyond the ongoing layoff announcements from industries that saw massive over-hiring during the pandemic (i.e. real estate, technology, information and media, etc.). Perhaps the most telling sign is LinkedIns’ measure of labor market tightness, the ratio of job openings to active applicants, which has been gradually declining over the past few months.

Some industries still struggling with filling open roles, others have their pick of top talent

The U.S. labor force is currently short of a net three million people since the beginning of the pandemic. The sudden drop in the availability of labor has led to an uneven recovery across industries. While conditions in some industries have cooled down significantly, some are still struggling and unable to return to being fully staffed.

LinkedIn’s data shows that industries fall into three categories: The first category includes industries with job markets experiencing some slack. These are industries where the number of job applicants exceeds the number of available jobs. In other words, in these industries, employers have their pick of top talent. The second category includes those industries with moderately tight job markets, and the third category includes industries with exceedingly tight job markets and labor shortages.

In the first category are government administration, education, and consumer services. The ratio of job openings to active applicants in these industries is well below the pre-pandemic baseline. Applicants are having to apply to multiple jobs before they are hired, and many employers are able to fill vacancies without raising wages.

In the second category are entertainment providers, technology, information and media, professional services, real estate, retail, and financial services. In these industries, job markets tightened considerably during 2021, but they have gradually been cooling down back to pre-pandemic levels. Separately, in the technology, information and media industry, conditions appear to have returned to the pre-pandemic baseline.

In the third category are accommodation, oil and gas, hospitals and healthcare. Labor market conditions in these sectors are tight by historical standards.

Technology, information, and media workers are staying put

The technology, information, and media industry continues to adjust to an era of higher interest rates. But despite the wave of layoffs in this industry, LinkedIn’s data suggests that technology, information, and media workers have become averse to leaving their field over the last few quarters. The “exodus rate” (defined as the percentage of workers leaving an industry when starting a new position) in the technology, information, and media industry has dropped from a high of 67.4% in June 2022 to just 60% in January 2023 - the lowest exodus rate we’ve seen in the data, and a 9.8% relative drop in the exodus rate compared to a year prior. Only the “real estate and equipment rental” industry saw a larger drop in exodus rates (from 52.4% in January 2022 to 46% in January 2023 - a 12% relative decrease).

Industry transitions for technology, information, and media workers are consistent with prior periods

The current layoffs could present an opportunity for young-tech startups or other companies in different industries to gain access to new talent in a less competitive market.

As stated above, the share of technology, information, and media workers leaving for new jobs within the same industry has gone up from 32.6% in June 2022 to 40.0% in January 2023. We also are seeing that workers who are leaving the technology, information and media industry are finding a home in other industries. Of workers who leave this industry, their top destinations are the same as in the past: professional services (the destination for 19.5% of those  starting a new job in Jan 2023), financial services (7.17%), and manufacturing (7.09%).

It is likely that technology, information, and media workers are becoming increasingly wary of leaving roles at traditional technology companies for different industries–suggesting that there is a “shelter in place” sentiment for many workers.


This article was updated on November 2, 2023.


Hiring Rate. The LinkedIn Hiring Rate (LHR) is the number of LinkedIn members who added a new employer to their profile in the same month the new job began, divided by the total number of LinkedIn members in that country.  By only analyzing the timeliest data, we can make month-to-month comparisons and account for any potential lags in members updating their profiles. This number is indexed to the average month in 2016; for example, an index of 1.05 indicates a hiring rate that is 5% higher than the average month in 2016.

Labor Market Tightness. Tightness is measured as the number of job openings on LinkedIn divided by the total number of active applicants in a given month. We measure job openings as the stock of open job positions on the last business day of the month. To measure active applicants, we include all individuals applying from within the U.S., and who submit at least one application to a U.S.-based job posting.