Job turnover fell in June This was reported by the Ministry of Labour on Tuesday, suggesting the U.S. labor market continues to slow down from its meteoric rise following pandemic shutdowns.
There were 9.6 million job openings in June, roughly the same as a month earlier, according to the Job Openings and Labor Turnover Survey (JOLTS).
Employers have tightened the screws on hiring in recent months, with job openings falling to the lowest level since April 2021 as the economy responds to tightening monetary policy.
The most notable changes in June were not in job openings, but in hiring and firings. There were 5.9 million hires in June, down from 6.2 million in May. And the resignation rate, a measure of workers’ confidence in the labor market and bargaining power, fell to 2.4 percent from 2.6 percent in May and down from a record 3 percent in April 2022.
The number of laid-off workers was 1.5 million, about the same as in May.
Quote: ‘The labor market is unbalanced.’
“We’re still in an economy where the labor market is unbalanced,” said Michael Strain, an economist at the American Enterprise Institute, “with the demand for workers significantly outstripping the supply of workers.” It’s about. 1.6 available jobs for every unemployed worker.
Why it matters: The economy is moving closer to a ‘soft landing’.
Over the past 16 months, as they’ve tried to curb inflation and ensure the economy doesn’t overheat, Federal Reserve policymakers have pursued the coveted “soft landing.” That means bringing inflation down to the Fed’s 2 percent target by raising interest rates without causing a significant jump in unemployment and avoiding a recession.
The June JOLTS report provides more optimism that the Fed is nearing the soft landing as demand for workers remains robust while gradually slowing. Inflation remains high by historical standards – at 3 percent according to the latest data – but has fallen significantly.
“This is a really strong labor market that remains strong but is slowing,” said Preston Mui, a senior economist at Employ America, a labor market research and advocacy firm.
At the end of their meeting last Wednesday, policymakers raised interest rates by a quarter point, and the Fed’s chairman, Jerome H. Powell, said its staff economists no longer forecast a recession for 2023. But Mr. Powell left the door open to further rate hikes and said the economy still had a “long way to go” to 2 percent inflation.
Background: It has been a good time to be a worker.
As the US economy quickly recovered from the Covid-19 recession in 2020, a powerful narrative built: “Nobody wants to work.” There was some truth to that hyperbole. Employers were having a hard time finding workers, and workers were reaping the rewards, quitting their jobs to find better paying (and successful).
With the number of resignations falling in recent months, the so-called Great Retrenchment appears to be over, if not waning, and the continued downward trajectory of job openings means employers are less eager to fill staff shortages.
Employers are not hiring with the fervor they were a few months ago, but they are not yet turning away workers who may not lose the gains they made during the pandemic recovery.
What’s next: The jobs report for July lands on Friday.
The Ministry of Labor will issue the employment report for July on Friday. The unemployment rate for June was 3.6 percent, down from 3.7 percent in May, but higher than the 3.4 percent recorded in January and April, the lowest unemployment rate since 1969.
June marked the 30th straight month of gains in U.S. payrolls as the economy added 209,000 jobs, and economists surveyed by Bloomberg expected the economy would have added another 200,000 jobs in July. Fed policymakers will watch the report closely, but another month of data will arrive before they next meet on the 19th-20th. September.