(Bloomberg) -- Weekly hours worked — an early indicator of changes in hiring patterns as well as demand — has reached a key inflection point.

Businesses, especially those that have struggled to hire and retain workers, typically seek out a number of different ways to handle softening economic conditions before laying off workers en masse. That includes scrapping job postings, hiring less, cutting temporary help and reducing hours.

Average weekly hours have fallen in three of the last four months, dropping to the bottom of the 34.3-34.6 hours range Julia Pollak, chief economist at ZipRecruiter, views as the “happy, healthy range for hours in the economy.” The June figure will be released in Friday’s jobs report.

“We may now be at an inflection point,” Pollak said. Zigzagging in this range would indicate a return to normal, she said, while a further decline would not only be concerning but also suggest a real slackening in the labor market. 

For sectors like retail trade, transportation and warehousing as well as construction, hours worked have fallen below pre-pandemic levels, which could make those sectors particularly vulnerable to job losses, according to economists at Macquarie Group Limited.

Others, like education and health, where hours remain elevated, may prove more resilient in the months ahead.

Recent survey data suggest hours are already being cut in manufacturing. The Federal Reserve Bank of Dallas’ June survey showed a gauge of the factory workweek shrank in June shrank for a third month. Excluding the immediate onset of the pandemic, the index for manufacturers covered by the Kansas City Fed registered the second-lowest reading in more than seven years.

And there are warning signals arising from non-manufacturing surveys as well. A measure of weekly hours worked at service providers and other non-manufacturers in the Philadelphia Fed region posted one of the lowest readings in data back to 2011. In Texas, an index of hours worked in the services industry shrank for a fourth month, according to the Dallas Fed. 

But direction doesn’t tell the full story either. The pandemic led companies to lay off millions of workers in a matter of weeks. When demand snapped back faster than many had anticipated, firms found themselves scrambling to hire workers.

Some of the industries seeing hours decline are ones where firms are still snapping up workers, like leisure and hospitality. For Guy Berger, LinkedIn’s principal economist, that suggests the hours worked figure is not as good of a leading indicator this time around. 

Fed officials at their last meeting viewed the recent slide in hours worked as an indication that the job market was becoming more balanced.

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For some sectors, the decline instead suggests that employees aren’t being overworked like they were, Berger said. “Because they’re able to hire and able to increase their headcount, they no longer are squeezing their prior workers as much.”

Bloomberg economist Stuart Paul has a similar view. The shorter workweek, in combination with growing payrolls, indicates “that employers are still enthusiastic about hiring when they can find qualified workers,” Paul said. “But with expectations of a weakening economy, they can slow production and cut hours worked as needed.”

--With assistance from Rich Miller.

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