The graph shows a reduction in average weekly working hours and is consistent with the figures before Covid. Given that the unemployment rate has risen from 3.4% to 3.9%, this points to a softening of job market and a slowing economy.
The pivotal question revolves around the sustainability of this trend. It’s worth noting that the impact of high real interest rates tends to bite with a delay. Consequently, it is entirely plausible that the job market will continue to weaken, prompting the Federal Reserve (FED) to consider rate cuts as early as the first half of 2024.
Currently, the market is assigning a 50% probability to the FED initiating rate cuts on May 1, 2024.