CNN
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Job opportunities in the US are slowly shrinking, with hiring falling at the slowest pace in a decade (excluding the pandemic-induced dip), leading more workers to hang on to the jobs they already have.
The good news is that these jobs are not in danger of being cut.
That’s according to the Bureau of Labor Statistics’ latest Job Openings and Labor Force Turnover Survey, with data released Tuesday showing that job openings fell slightly in June, hiring activity dipped, layoffs were contained and job separations hit a three-year low.
It’s yet another sign that a once-red hot labor market isn’t just settling into a plateau but may be approaching a downturn.
” [Tuesday’s] “Data suggests the labor market cooling is occurring at a manageable pace, but warning signs remain,” Wells Fargo economists Sarah House and Aubrey George wrote in a client note on Tuesday. “Labor demand remains concentrated in a few industries, workers are hunkering down and worried about their job security, and businesses are reluctant to hire new workers.”
Employers announced an estimated 8.18 million job openings in June, which was higher than economists expected but a slight step back from May’s upwardly revised figure of 8.23 million job openings, according to the JOLTS report.
This is also the second-lowest monthly total so far this year, bringing the job openings-to-job seekers ratio to 1.24, slightly above the 2019 average, BLS data showed.
Economists had expected job openings to fall to 8 million, according to FactSet consensus estimates.
Last month’s hiring was one of the weakest in years. An estimated 5.34 million people were employed, and the employment rate (the number of people employed as a percentage of the total number of jobs) was the lowest since April 2020, when the pandemic began and the job market collapsed. Outside of a pandemic, the last time the employment rate was that low was in February 2014, according to BLS data.
“Clearly, we’re seeing a significant slowdown in hiring and, with that, slower turnover,” Daniel Chao, chief economist at employment review and online job site Glassdoor, told CNN. “I think the slowdown in hiring and the slower turnover rates are indicative of a lack of healthy turnover in the job market.”
“Employers are not hiring as aggressively, so employees are not finding the next opportunity to advance their careers and are instead waiting and prioritizing job security,” he added.
Beyond job headlines, economists also keep a close eye on the turnover rate — the number of people who voluntarily quit their jobs as a percentage of total employment — as a signal of whether workers are willing to take on new challenges in the labor market.
The June separation rate remained at its lowest level since June 2020 at 2.1%, while the number of estimated separations fell from 3.403 million to 3.282 million, marking the lowest monthly total since November 2020.
A bright spot for workers and the overall health of the labor market is that layoffs fell sharply to an estimated 1.498 million in June, the lowest since November 2022. Weekly claims for unemployment insurance are gradually increasing, but overall layoffs remain well below pre-pandemic levels, Zhao said.
“Looking at the hard economic data on layoffs, I don’t think the current situation is a red flag, but it’s clear that workers are still very concerned,” Zhao said, noting that the latest Glassdoor survey showed employee confidence was declining.
He added that the low number of layoffs indicates that employers are simply being cautious and that there is some pent-up demand to start hiring again.
“The signals we’re getting right now are more about caution than a deeper deterioration in the economic situation,” he said. “Obviously, it can’t go on forever, so I think we’re waiting for a catalyst in one direction or the other.”
The most likely trigger will be when the Federal Reserve finally pulls the trigger and begins a cycle of cutting interest rates.
The U.S. central bank has kept interest rates at a 23-year high for the past 12 months as it waits for inflation to show a sustained slowing trajectory after embarking on one of its most aggressive monetary tightening measures since March 2022.
While that has certainly happened in recent months, Fed officials must acknowledge that they are becoming more sensitive to the stability of the labor market, which has cooled and the unemployment rate has been steadily rising.
The Federal Reserve is due to announce its latest interest rate decision on Wednesday in what is widely expected to be another pause on rate cuts, with markets expecting the first rate cut to come in September.
“i don’t think so [a September rate cut] “It would be too late, but I can understand why the Fed should cut rates sooner,” Zhao said. “The difficulty with this is that monetary policy works on a long and variable time lag. We’ve already seen a pretty significant slowdown in the housing market, and the question is how long it will take for a rate cut to trickle down to the labor market if one is implemented in September.”
