U.S. job openings fell in June, with labor market perceptions deteriorating, indicating a gradual slowdown. Fed expected to cut rates in September.
Washington, Bollywood Fever: U.S. job openings experienced a modest decline in June, and revised data for the previous month showed higher numbers, indicating a gradual slowdown in the labor market without the risk of rapid weakening.
Despite this, consumer perceptions of the labor market are deteriorating. A survey from the Conference Board on Tuesday revealed that the share of consumers viewing jobs as “hard-to-get” has risen to its highest level in over three years. T
he proportion of those believing jobs were “not so plentiful” also reached its highest point since March 2021.
An increase in the unemployment rate over the past three months has fueled concerns about labor market weakness and the broader economic outlook.
“The labor market has cooled over the last several months but isn’t weak,” stated Nancy Vanden Houten, U.S. lead economist at Oxford Economics.
“However, that’s a scenario the Federal Reserve wants to guard against, and we expect the Fed to begin cutting rates in September.”
Job openings, a key measure of labor demand, fell by 46,000 to 8.184 million by the end of June, according to the Labor Department’s Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS).
May’s data was revised higher to show 8.230 million unfilled positions, up from the previously reported 8.140 million. Economists polled by Reuters had forecast 8.0 million job openings in June.
Job openings have been steadily declining since peaking at a record 12.182 million in March 2022 as demand moderates in response to the Federal Reserve’s aggressive interest rate hikes. Openings have decreased by 941,000 over the past year.
There were 0.9 job openings for every unemployed person in June, down from 1.1 in May. Job openings increased by 120,000 in accommodation and food services, and an additional 94,000 unfilled positions were reported in state and local government, excluding education.
However, there were 88,000 fewer open positions in durable goods manufacturing and a decrease of 62,000 in the federal government.
The job openings rate remained unchanged at 4.9%. Hires declined by 314,000 to 5.341 million, lowering the hires rate to 3.4% from 3.6% in May.
Layoffs decreased by 180,000 to 1.498 million, the lowest level since November 2022. The slowdown in the labor market is primarily driven by reduced hiring rather than layoffs.
A loosening labor market, along with subsiding inflation, supports the case for the U.S. central bank to begin cutting rates in September.
Fed officials commenced a two-day policy meeting on Tuesday and are expected to maintain the central bank’s benchmark overnight interest rate in the 5.25%-5.50% range, where it has remained since last July.
The Fed has raised its policy rate by 525 basis points since March 2022 to control inflation.
Hiring decreased by 115,000 in professional and business services and by 111,000 in accommodation and food services.
The construction sector saw a decline of 41,000 in hiring. Layoffs decreased in nearly all industries except for retail trade, where they rose by 25,000. The layoffs rate dropped to 0.9% from 1.1% in May.
The number of people voluntarily quitting their jobs, likely for better opportunities, dropped by 121,000 to 3.282 million. Quits in construction fell by 64,000.
The quits rate, viewed as an indicator of labor market confidence, remained unchanged at 2.1%. A steady quits rate bodes well for wage inflation and overall price pressures.
Consumer confidence in the labor market is declining. The Conference Board survey showed the share of consumers reporting that jobs were “not so plentiful” rose to 49.9% this month, the highest level since March 2021, up from 48.8% in June.
The proportion viewing jobs as “hard-to-get” increased to 16.0%, also the highest reading since March 2021.
The survey’s labor market differential, which reflects respondents’ views on whether jobs are plentiful or hard to get, narrowed to 18.1 from 19.8 in June.
This measure correlates with the unemployment rate in the Labor Department’s monthly employment report. The unemployment rate rose to a 2-1/2-year high of 4.1% in June.
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