Job Openings Show Modest Decline Amid Labor Market Slowdown

By Lucia Mutikani
WASHINGTON (Reuters)
U.S. job openings fell modestly in June, with the prior month’s data revised higher, indicating a gradual slowdown in the labor market without immediate danger of a significant downturn.

Consumers’ perceptions regarding job availability are declining, as indicated by a recent Conference Board survey showing the highest percentage of respondents considering jobs “hard-to-get” in over three years.

The rise in the unemployment rate over the previous three months has heightened concerns about labor market fragility and overall economic growth.

Federal Reserve officials commenced a two-day policy meeting on Tuesday, expected to maintain the U.S. central bank’s benchmark overnight interest rate between 5.25%-5.50%.
Nancy Vanden Houten, U.S. lead economist at Oxford Economics, stated, “The labor market has cooled but isn’t weak. However, the Fed wants to be cautious, forecasting potential rate cuts starting in September.”

According to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), job openings dropped by 46,000 to 8.184 million by the end of June. May’s data was revised to reflect 8.230 million openings.

Job openings have steadily declined from a record high of 12.182 million in March 2022 as demand cools in response to the Fed’s aggressive rate hikes, showing a year-over-year decrease of 941,000.

The job openings-to-unemployment ratio was 1.20 in June, down from 1.24 in May. Categories showing increased openings included accommodation and food services (+120,000) and several state and local government jobs (+94,000). However, durable goods manufacturing saw a decline of 88,000 positions.

The job openings rate remained at 4.9%.

Declining Hires

Hires fell significantly by 314,000 to 5.341 million, marking the most substantial decline in 16 months. This pushed the hire rate down to 3.4%, the lowest since April 2020. Only businesses with fewer than ten employees reported an increase in hiring.

Layoffs decreased by 180,000 to 1.498 million, the lowest rate since November 2022. The labor market slowdown appears to be driven by reduced hiring, not by layoffs, further supporting the case for a rate cut in September. The Fed has raised its policy rate by 525 basis points since March 2022 to control inflation.

Economist Jonathan Millar from Barclays noted that June’s JOLTS data points toward stabilization in labor demand, suggesting a balanced labor market.

Hiring reductions were noted in professional and business services (-115,000), accommodation and food services (-111,000), and construction (-41,000). Layoffs were down across most sectors except retail trade, which increased by 25,000. The layoffs rate decreased to 0.9%, the lowest since April 2020.

A decline in voluntary job quits also occurred, dropping by 121,000 to 3.282 million, especially within construction (down 64,000). The quits rate, an indicator of labor market confidence, remained unchanged at 2.1%, indicative of subsiding wage pressures and overall inflation.

This trend of reduced resignations is reflected in the Conference Board’s survey, reporting that 49.9% of consumers felt jobs were “not so plentiful,” the highest since March 2021. The perception of jobs as “hard-to-get” increased to 16.0%. The labor market differential, which relates to the unemployment rate, narrowed slightly.

Meanwhile, consumer confidence rose but buying intentions for the next six months declined, especially among those planning to purchase homes, suggesting a rebound in the housing market remains unlikely. According to another report, house prices increased by 5.7% year-on-year in May, marking the smallest gain in ten months.

Thomas Ryan, North America economist at Capital Economics, projected that market conditions might only start to improve by 2025 or even 2026.