US job openings fall to nine-month low; labor market holds tight

Despite the larger-than-expected decrease in vacancies reported by the Labor Department in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, the jobs market still favors workers. At least 4.2 million workers voluntarily quit their jobs in June and layoffs declined.

Job openings are among several metrics being closely watched by Fed officials. The U.S. central bank has been delivering hefty interest rate hikes in its war against inflation, pushing the economy to the brink of a recession.

“The labor market may be cooling off, but the temperature decline is far from a plunge,” 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’s no sign of imminent danger in the labor market.”

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

Job openings have been declining since scaling a record high of 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 dampen demand for labor and the overall economy to bring inflation down to its 2 percent target.

The central bank last week raised its policy rate by another three-quarters of a percentage point. It has now hiked that rate by 225 basis points since March. The economy contracted 1.3 percent in the first half of the year. Wild swings in inventories and the trade deficit tied to snarled 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. U.S. Treasury prices fell.

Not recessionary

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

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

While vacancies fell in all four regions, the decrease was more pronounced in the technology-heavy West, where companies have been laying off workers and rescinding job offers.

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

The jobs-workers gap fell to 2.9 percent of the labor force from 3.3 percent in May. It is down from its peak of 3.6 percent of the labor force in March, an improvement economists at Goldman Sachs 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.

In June, about 4.2 million people quit their jobs, down from 4.3 million in May. The quits rate, viewed by policymakers and economists as a measure of job market confidence, was unchanged at 2.8 percent.

There was a modest rise in resignations in manufacturing, retail and wholesale trade industries. But fewer workers quit in financial activities, professional services as well as leisure and hospitality. More people resigned in the South, while fewer did so in the Northeast, Midwest and West.

Layoffs slipped to 1.3 million from 1.4 million in May. The layoffs rate was unchanged at 0.9 percent. Layoffs rose in construction, but dropped in wholesale and retail trade as well as financial services.

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