By Emmanuel Nduka
Job openings in the US fell to the lowest level in more than two years in June, but remained at levels consistent with tight labor market conditions despite the Federal Reserve’s hefty interest rate increases.
This is according to Job Openings and Labor Turnover Survey (JOLTS) report, from the Labor Department on Tuesday, which also showed that layoffs and discharges declined for a third straight month.
According to the JOLTS report, there were 1.6 job openings for every unemployed person in June, just a little different from May. While Labor market resilience suggests the Fed could keep rates higher for longer, the US central bank has hiked its policy rate by 525 basis points since March 2022 to lower high inflation.
“While today’s report discusses data from June, this continued strength in the labor market is likely to keep Fed officials hawkish,” said Eugenio Aleman, chief economist at Raymond James.
The report adds that job openings, a measure of labor demand, dropped 34,000 to 9.582 million as of the last day of June, the lowest level since April 2021. There were an additional 136,000 job openings in healthcare and social assistance, while vacancies increased by 62,000 in state and local government, excluding education.
This is as transportation, warehousing and utilities had 78,000 fewer open positions, while unfilled jobs in state and local government education dropped by 29,000, while the federal government had 21,000 fewer vacancies.
The job openings rate was unchanged at 5.8% in June. Hiring dropped 326,000 to 5.905 million, which lowered the hires rate to 3.8% from 4.0% in May. The decline in hiring was concentrated in durable goods manufacturing as well as finance and insurance.
Layoffs and discharges fell 19,000 to 1.527 million, but despite the labor market’s resilience, workers are showing less appetite to seek greener pastures, according to the JOLTS report. Resignations dropped 295,000, the most since during the first wave of the pandemic, to 3.772 million. As a result, the quits rate, viewed as a measure of labor market confidence, fell to 2.4% from 2.6% in May.
While the labor market remains defiant, higher borrowing costs are hurting manufacturing, though factory activity appeared to stabilize at weaker levels in July. The Institute for Supply Management (ISM) said in a separate report that its manufacturing PMI edged up to 46.4 last month from 46.0 in June, which was the lowest reading since May 2020.
The US Government reported last week that business spending on equipment grew solidly in the second quarter after slumping in the prior two quarters.
Manufacturing accounts for 11.1% of the US economy. Spending on long-lasting manufactured goods has slowed after booming during the pandemic, with services like airline travel and visits to amusement parks now in favor.
Manufacturing employment likely rose by 5,000 jobs last month, according to a Reuters survey of economists. Overall nonfarm payrolls are forecast to rise by 200,000 jobs in July after increasing by 209,000 in June.
