Job Market Shows Resilience, Quieting Recession Fears

“The weakness in industrial demand is broad-based, with some acute pockets of softness in areas like automotive, heavy truck, oil and gas and agriculture,” Mr. Gershwind said.

In response, the company has cut more than 100 jobs, and says it expects to reduce employment further this quarter.

Economists worry that as companies like MSC cut jobs, consumers could grow wary, allowing the weakness in the industrial economy to spill over into the much larger service sector. So far, however, that has not happened. Consumer spending was strong in the third quarter, and measures of consumer confidence, though down from a year ago, remained high.

Hotels and restaurants added more than 50,000 jobs in October, and even the struggling retail sector posted a second straight month of gains after months of steady losses. And revisions to earlier data erased hints that the slowdown was spreading.

“We could accept data that shows weakness in manufacturing,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “Where it becomes a lot more problematic is if that weakness is spreading. We were starting to see indications of that the last few months, but they’ve now been revised away. It’s painting a brighter picture of the service sector of the economy.”

That divergence — between confident consumers and wary businesses — cannot continue forever. Eventually, either businesses will start to cut jobs, a sure way to erode consumers’ confidence, or free-spending shoppers will set executives’ minds at ease and encourage them to ramp up production again.

So far, consumers appear to be prevailing.

“As long as confidence remains pretty elevated, as long as job gains continue albeit at a slower pace,” said Ben Herzon, an economist for Macroeconomic Advisers by IHS Markit, a forecasting firm. “And as long as those job gains continue to deliver wage growth, consumption should continue to drive the economy.”