The labor market in the US has been a bright spot amidst recent uncertainty surrounding the housing market and trade. But US job openings and hiring both fell in June according to a report from the Labor Department, and some are interpreting that data to mean that the demand for labor is cooling along with the economy as a whole.
If that’s the case, it could provide the Fed with a reason to cut rates yet again next month.
Although that’s far from certain at this point, there is an undercurrent of worry in spite of the current economic expansion being the longest in US history.
The economy grew at a 2.1% annualized rate in the second quarter, decelerating from the January-March quarter’s brisk 3.1% pace.
“Companies may be having difficulty filling positions or may be reticent to hire given the growing uncertainty in the economy,” Sophia Koropeckyj, a senior economist at Moody’s Analytics told Reuters. “Business confidence has taken a beating this year.”
Job openings, a measure of labor demand, slipped by 36,000 to a seasonally adjusted 7.3 million in June, according to the monthly Job Openings and Labor Turnover Survey (JOLTS). Since hitting an all-time high of 7.6 million in late 2018, job openings have been flat this year, suggesting some easing in labor market conditions.
The job openings rate dipped to 4.6% from 4.7% in May. Job openings increased in the real estate and rental and leasing industry, and state and local government education. There were also declines in vacancies in the leisure and hospitality sector, as well as in construction.
Hiring decreased by 58,000 jobs to 5.7 million in June. The hiring rate was unchanged at 3.8%. Hiring fell in the manufacturing and professional and business services industries. It increased by 76,000 jobs in the accommodation and food services industry.
The slowdown is happening across the country, according to Nick Bunker, an economist at Indeed Hiring Lab.
“Employer demand is slowing down, and the labor market isn’t improving at the rate that it was before, but things aren’t getting worse,” Bunker told Reuters.
Modest hiring in June indicates that a surge in job growth in the months ahead is unlikely. Nonfarm payrolls increased by 164,000 jobs in July, down from 193,000 in June. Some economists believe that the hiring slowdown is due in part to the fading stimulus from the 2018 $1.5 trillion tax cut package.
“Job openings have eased in such sectors as information, finance, and professional and business services, a possible harbinger of weaker employment gains in coming quarters,” Koropeckyj said.
The report also includes the number of workers voluntarily quitting their jobs. This is known as the quits rate, which policymakers and economists view as a measure of confidence in the job market. The quits rate dipped to 3.4 million in June from 3.5 million in May, and was unchanged at 2.3% for the 13th straight month.
The decline in the number of workers quitting their jobs was concentrated in transportation, warehousing, and utilities, and state and local government, excluding education. There was, however, an increase in the number of workers quitting their jobs in the construction sector.
Layoffs also declined in June, pushing the layoffs rate to 1.1% from 1.2% in May. Layoffs fell in professional and business services as well as the arts, entertainment, and recreation sector, but rose in the accommodation and food services sector.