US job openings fall to nine-month low; the labor market is holding up

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

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

Job postings are among several metrics watched closely by Fed officials. The US central bank has raised interest rates sharply in its war on inflation, pushing the economy to the brink of recession.

“The labor market may be cooling, but the drop in temperature is far from a dip,” 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 postings, a measure of labor demand, fell by 605,000 to 10.7 million on the last day of June, the fewest since September 2021, according to the JOLTS report. The June drop was the largest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.

Job postings have been falling since hitting a record high of 11.9 million in March. Yet job openings are a far cry from the low levels seen during the Great Recession 13 years ago.

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

The central bank last week raised its key rate by an additional three-quarters of a percentage point. It has now raised that rate by 225 basis points since March. The economy contracted by 1.3% in the first half of the year. Sudden swings in inventory and the trade deficit linked to struggling global supply chains are largely to blame, although overall economic momentum has cooled.

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

NOT RECESSIONARY

Job openings fell by 343,000 in the retail sector. The wholesale industry had 82,000 fewer vacancies, while state and local government education reported a 62,000 reduction in openings. Construction, highly sensitive to interest rates, saw its vacancies fall by 71,000.

There were slight declines in manufacturing and leisure and hospitality. Job opportunities were little changed in professional and business services and increased slightly in financial activities.

While vacancies fell in all four regions, the decline was more pronounced in the tech-heavy West, where companies laid off workers and rescinded job openings.

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

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 labor force in March, an improvement according to Goldman Sachs economists, suggesting wage growth is likely to 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 left their jobs, compared to 4.3 million in May. The quit rate, seen by policymakers and economists as a measure of confidence in the job market, remained unchanged at 2.8%.

There was a slight increase in quits 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 did in the Northeast, Midwest and West.

Layoffs slipped to 1.3 million from 1.4 million in May. The layoff rate remained unchanged at 0.9%. Layoffs rose in construction, but fell in wholesale and retail trade and in financial services.

“Overall, the JOLTS report is one of many labor market indicators that don’t look ‘recessive’ despite more negative signals from some other economic indicators,” JPMorgan economist Daniel Silver told New York.

Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama

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