US Job Openings Drop to Nine-Month Low; labor market remains firm

  • Job offers fall 605,000 to 10.7 million in June
  • Retail and wholesale trade accounts for decrease in vacancies
  • Closes with few changes at 4.2 million; Layoffs are down

WASHINGTON, Aug 2 (Reuters) – U.S. job openings fell the most in just over two years in June as demand for workers fell in the retail and wholesale industries, but the job market generally remains tight, allowing the Federal Reserve to continue raising interest rates.

Despite the larger-than-expected decline in job openings reported by the Department of Labor in its Survey of Job Vacancies and Turnover, or JOLTS report, on Tuesday, the job market still favors workers. At least 4.2 million workers voluntarily quit their jobs in June and layoffs fell.

Job openings are among several metrics Fed officials watch closely. The US central bank has been making sharp interest rate hikes in its war against inflation, bringing the economy to the brink of a recession.

Sign up now for FREE unlimited access to Reuters.com

“The labor market may be cooling, but the temperature drop is far from a crash,” said Nick Bunker, director of economic research at Indeed Hiring Lab in Washington. “The outlook for economic growth may not be as rosy as it was a few months ago, but there are no signs of imminent danger in the labor market.”

Job openings, a measure of labor demand, fell by 605,000 to 10.7 million on the last day of June, the fewest since September 2021, the JOLTS report showed. June’s drop was the biggest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.

Job openings have dropped since reaching a record 11.9 million in March. Still, job openings are nowhere near the low levels seen during the Great Recession 13 years ago.

Economists polled by Reuters had forecast 11.0 million vacancies. The Fed is trying to rein in labor demand and the broader economy to bring inflation down to its 2% target.

The central bank last week raised its policy rate by another three-quarters of a percentage point. It has now increased that rate by 225 basis points since March. The economy contracted 1.3% in the first half of the year. Wild swings in inventories and trade deficits tied to tangled global supply chains have been largely to blame, though overall economic momentum has cooled.

Stocks on Wall Street were mixed. The dollar rose against a basket of currencies. US Treasury prices fell.

NON-RECESSIONARY

Job openings decreased by 343,000 in the retail trade sector. The wholesale trade industry had 82,000 fewer openings, while state and local government education reported a 62,000 reduction in openings. Construction, which is highly sensitive to interest rates, posted a decrease of 71,000 jobs.

There were modest declines in manufacturing and leisure and hospitality. Job openings were little changed in professional and business services, and increased in financial activities.

While vacancies fell in all four regions, the decline was steepest in the tech-heavy west, where companies have been laying off workers and rescinding job offers.

Hiring fell to 6.4 million from 6.5 million in May. In June there were 1.8 jobs for every unemployed person.

Reuters Charts

The gap between jobs and workers fell to 2.9% of the labor force from 3.3% in May. It is down from its peak of 3.6% of the workforce in March, an improvement that Goldman Sachs economists said suggested wage growth should slow in the second half of the year. Annual wage growth in the second quarter was the fastest since 2001. read more

In June, about 4.2 million people quit their jobs, up from 4.3 million in May. The resignation rate, seen by politicians and economists as a measure of labor market confidence, was unchanged at 2.8%.

There was a modest increase in resignations in the manufacturing, retail and wholesale industries. But fewer workers are leaving financial activities, professional services, and leisure and hospitality. More people quit in the South, while fewer in the Northeast, Midwest and West.

Layoffs fell to 1.3 million from 1.4 million in May. The layoff rate was unchanged at 0.9%. Layoffs increased in construction, but fell in wholesale and retail trade, as well as in financial services.

“The JOLTS report overall is one of many labor market indicators that don’t look ‘recessionary’ despite more dovish signals coming from other economic indicators,” said Daniel Silver, an economist at JPMorgan in New York.

Sign up now for FREE unlimited access to Reuters.com

Information from Lucía Mutikani; Edited by Paul Simao and Chizu Nomiyama

Our standards: The Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.