By Zoe Han

Shares of Meta, Alphabet Inc., Amazon, Microsoft and others all suffered after a string of earnings disappointed Wall Street

How is the job market in the technology sector? Unfortunately, not so great.

Hiring in the tech sector fell after the Federal Reserve began aggressively raising interest rates earlier this year, according to new analysis from ZipRecruiter. The Fed has raised rates six times this year, including four hikes of 0.75 percentage points in the key rate starting in June. That pushed the short-term borrowing rate into a target range of 3.75% to 4%, making car loans and credit card debt more expensive. It also makes it harder for high-growth stocks to generate growth at the same pace as in previous years.

The Fed’s actions have made it harder for the interest-rate-sensitive tech sector, said Julia Pollak, chief economist at ZipRecruiter, a job search engine. The high interest rate environment has made borrowing more expensive, and a strong dollar depletes the value of income from foreign markets. Additionally, high-growth tech stocks are vulnerable to rising interest rates, reducing the value of future earnings Shares of Facebook parent company Meta Platforms Inc. (META), Google parent company Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and Microsoft (MSFT) all suffered after a string of earnings that disappointed Wall Street.

The number of job postings for tech jobs on ZipRecruiter peaked in May with more than 1.9 million jobs, up 87% from February 2020 just before the outbreak. coronavirus is declared a pandemic. But hiring started falling in June around the same time as the Fed’s first 75 basis point hike (one basis point equals one-hundredth of a percentage point, or 1% of 1%). In October, the number of job postings for tech jobs fell to 1.3 million.

Employers are looking to fill fewer entry-level technician positions. On Nov. 15, only 2.7% of active job postings for data engineers on ZipRecruiter were looking for “junior,” “entry-level,” or “level I” candidates. Demand was even lower for Enterprise Resource Development Engineers (1.6%), Software Developers (1.2%), Software Engineers (0.8%) and Systems Engineers (1 .8%). Instead, a large proportion of active job postings in these roles were looking for “mid-level” or “Tier II” candidates – 71% of software developer job postings and 48.6% of engineers in software.

The current trend is moving away from normal times and other non-tech roles as tech companies – in an effort to cut costs and prepare for a possible recession – seem less willing to spend time on training and onboarding new employees, Pollak told MarketWatch. . In normal times, the job search is generally pyramid-shaped, with the highest positions at the top of the pyramid, Pollak said. Employers tend to look for more junior workers, as they are cheaper, and fewer managers and middle staff.

Consumers are also uncertain about the economic outlook, according to the Federal Reserve Bank of New York’s consumer expectations survey released this month. The share of people expecting higher unemployment rates a year from now hit a high not seen since April 2020. Consumer sentiment was also weaker than expected in November, according to the latest U.S. consumer outlook. ‘University of Michigan. These reports, along with a series of hiring freezes and layoffs in the tech sector, have added to the pace of the recession.

There has been a flurry of news about layoffs in Silicon Valley in recent weeks. Amazon could lay off about 10,000 workers, or about 3% of its staff, according to the Wall Street Journal. Facebook parent company Meta recently said it was cutting 11,000 employees, or about 13% of its workforce, in the first layoffs in the company’s 18-year history. Tesla founder Elon Musk, who recently bought Twitter for $44 billion, quickly launched an effort to cut costs at the unprofitable company; which included 7,500 layoffs worldwide, or 50% of its global workforce.

(Andrew Keshner contributed to this story.)

-Zoe Han

(END) Dow Jones Newswire

11/22/22 2314ET

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