What Happens to HY Credit Spread (OAS) When Average Weekly Hours Collapse?
What happens when average weekly hours worked collapse? Early warning of labor demand weakness before layoffs begin.
How HY Credit Spread (OAS) Responds
Scenario Background
Average weekly hours worked measures how many hours the typical private-sector employee works each week. Employers typically reduce hours before laying off workers, making this series one of the earliest labor market indicators of economic weakening. When hours fall, total labor income falls even if headcount is stable.
Read full scenario analysis →Historical Context
Average weekly hours were 34.6 in late 2019 before the COVID shock dropped them to 33.7 in April 2020. The post-COVID recovery peaked at 35.0 in 2021 before normalizing to 34.3 by 2024. During the 2008 recession, hours fell from 34.7 to 33.7 over 18 months, shedding more total labor than the headline job losses suggested. The 2001 recession saw a similar but milder decline from 34.3 to 33.8.
What to Watch For
- •Manufacturing overtime hours falling below 3.0
- •Temp help employment declining for 3+ consecutive months
- •Hours index YoY turning negative
- •Aggregate payroll income YoY decelerating toward 2%
- •Retail sales YoY decelerating below 2%
Other Assets When Average Weekly Hours Collapse
Other Scenarios Affecting HY Credit Spread (OAS)
Get scenario analysis and HY Credit Spread (OAS) alerts delivered to your inbox.