The hot labor market could be starting to soften, as U.S. employers posted 10.7 million job openings in June, tapering off a bit from previous months.
But the number of people who quit their jobs was still elevated, at 2.8%, according to data released Tuesday by the Bureau of Labor Statistics.
The June data follows several months of record-high job openings and quit rates, which marked the high point of the hot labor market, as employers scrambled to find workers amid shortages across many sectors.
June’s figures continue to reflect a strong labor market.
“June was a pivotal month for the labor market,” said Julia Pollak, a labor economist at ZipRecruiter.
“There were interest rate hikes, the stock market entered a bear market, industrial output was negative and consumer spending slowed. A whole number of key recession indicators flipped.”
The slowing down in the labor market is related to mounting head winds in the economy.
Inflation has soared to a 40-year high, which is weighing on many companies and households.
In response, the Federal Reserve has raised interest rates four times this year, including by three-quarters of a percentage point in July.
The Fed is aiming to bring prices down, but that work is expected also to push up the unemployment rate from 3.6% to 4.1%.
The Fed’s goal is to reduce the number of job postings and hirings without triggering a massive wave of job losses.
“What we’re seeing in June will get quite a bit worse in July,” Pollak said. “That’s because (the Fed) is throwing a lot of cold water on the economy generally and causing a huge amount of uncertainty.”
The retail and wholesale trade sectors saw a notable decline in job openings in June, which could reflect a shift in consumer demand away from goods toward services that people cut back on during the pandemic, such eating out, going to the movies and travel.
Job openings in retail dropped in June to 800,000 from 1.2 million in May. Openings in wholesale trade fell from 370,000 to 290,000.
“Some sectors are pulling back on hiring intentions because their broader economic outlook is starting to become less rosy or they have industry-specific concerns,” said Nick Bunker, head of research at Indeed’s Hiring Lab.
“Retail and wholesale trade are sectors that employ lots of people and there’s lots of inventory buildup in retail. Some employers are starting to say, ‘OK, we have too much inventory, and there won’t be continued demand for good, so let’s slow down hiring.’ At the same time, they’re not letting workers go.”
A record number of Americans quit their jobs over the past year, in a phenomenon known as the Great Resignation, as a hot labor market spurred by the pandemic afforded them leverage to find better-paying opportunities, particularly in leisure and hospitality.
But data suggests this era may be coming to a close.
Although workers are still quitting their jobs at a higher than normal rate, Americans are no longer pursuing other opportunities at the same pace that they had been.
“Quits are still very elevated historically, but they are not accelerating,” said Kory Kantenga, a senior economist at LinkedIn.
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