According to Labor Department data released Tuesday, job openings and layoffs decreased in June, indicating a solid labor market.
According to the department’s monthly Job Opportunities and Labor Turnover Survey, employment opportunities reached 9.58 million in June, a little decrease from the downwardly revised 9.62 million in May. That was the lowest amount of vacancies since April 2021, and it fell short of FactSet’s expectation of 9.7 million.
In addition, the JOLTS data stated that layoffs decreased to 1.53 million from 1.55 million in May.
Economists were looking for signals about the trajectory of the job market, which has been remarkably robust despite a series of Federal Reserve interest rate rises aimed at slowing the economy and inflation.
“This is definitely heading in the Goldilocks direction,” Rachel Sederberg, senior economist at labor analytics firm Lightcast, said. “We still have a long way to go, and there are a lot of openings, especially compared to where we were before the pandemic.” But we’re moving in the right direction and doing so calmly, which is what we want to see.”
Declines in both job vacancies and layoffs signal that labor demand is decreasing, as the Fed anticipates, but businesses are still keeping employees, implying that the unemployment rate is unlikely to rise very soon.
The JOLTS report is an important signal for the Fed as it considers what to do next after raising interest rates by 5.25 percentage points since March 2022.
“According to a variety of economic indicators, the US economy was cruising in the second quarter.” “The June JOLTS data is no exception,” said Nick Bunker, the Indeed Hiring Lab’s head of economic research. “The current slowdown may be too gradual for many Federal Reserve policymakers, as job openings are only gradually declining.” Workers, on the other hand, have a lot to be happy about and still have a lot of power.”
The overall number of job opportunities in June is down about 1.4 million, or 12.6%, from the same month a year earlier. According to Labor Department figures, there are presently around 1.6 job opportunities for every available worker.
Health care and social assistance, as well as state and local government excluding education, had an increase in job openings, while transportation, warehousing, and utilities, as well as state and local government education, saw a decrease.
Along with the decrease in job opportunities and layoffs, there was a decrease in hiring to 5.9 million, a 0.2 percentage point decrease as a share of total employment. Quits also fell considerably, by about 300,000, or 0.2 percentage points.
Manufacturing is still contracting.
According to a second data released on Tuesday, the manufacturing sector, which reported reductions in both job opportunities and hiring in June, remained in contraction in July. The ISM Manufacturing Index read 46.4, showing the ratio of businesses reporting increase vs contraction. A value less than 50 implies contraction.
The index rose for the month but fell short of the Dow Jones projection of 46.8. The biggest factor weighing on the index was a 3.7-point drop in employment, although new orders, output, and inventories all increased from June.
“The widely anticipated boost from China’s re-opening has amounted to very little, and more generally, we see few signs of any near-term improvement in the outlook,” stated Ian Shepherdson, chief economist at Pantheon Macroeconomics.
While the decline in manufacturing jobs is unlikely to have a significant influence on the headline payrolls figure, the ISM survey illustrates a continuous shift in the Covid-era recovery from goods to services consumption.
For a more complete view of the economy, analysts will look to a slew of statistics over the next few days, including the ADP private sector hiring report on Wednesday, weekly jobless claims on Thursday, and the critical nonfarm payrolls report on Friday. The July jobs report is likely to reveal 200,000 new positions, down from 209,000 in June, with the unemployment rate remaining at 3.6%.