U.S. jobseekers still held power despite slightly fewer open gigs to choose from in June amid record demand for workers, according to data released Tuesday by the Labor Department.
The June Job Openings and Labor Turnover Survey released Tuesday showed a slight decrease in job openings, which are still near record highs set earlier this year. But the number of workers who were hired, laid off or quit their jobs held about even in June, even amid high inflation and a slowing economy.
“The decline in openings is to be expected given the degree of economic uncertainty and the recent deterioration in financial conditions, following the Federal Reserve’s interest rate hikes,” wrote Julia Pollak, chief economist at ZipRecruiter.
“So far, however, the decline has been relatively modest, with the number of job openings still 53% higher than before the pandemic.”
Job openings have remained at historically high levels since 2021 as the rapid economic rebound from the COVID-19 recession ran into obstacles created by the lingering pandemic.
While consumer activity is well above pre-pandemic levels, businesses have struggled to meet that demand because the size of the U.S. workforce has not yet recovered. Businesses have been forced to raise wages rapidly, offer telework options, do more on-the-job training and avoid layoffs to fill open jobs, which has played a role in fueling higher inflation.
The Fed began raising interest rates in March to slow the pace of the economy enough to cool off inflation. Economists have become more concerned that the Fed may induce a recession after U.S. gross domestic product suffered two consecutive quarters of negative economic growth, even as the economy added more than 2.7 million jobs over the first half of the year.
While the economy on the whole slowed notably in June, the labor market barely budged.
Job openings fell to 10.7 million on the final business day of June, according to the Labor Department, down from 11.3 million the previous month. That still left almost two open jobs for each of the 5.9 million Americans who were unemployed in June, giving workers ample power to find better work for higher wages.
The number of Americans taking new jobs fell slightly from 6.5 million in May to 6.4 million in June, and the number of Americans who either left or were dismissed from jobs fell slightly in June to 5.9 million from 6 million in May.
Roughly 4.2 million Americans quit their jobs in June, likely to take new ones with better compensation or career opportunities. The percentage of workers who quit their jobs in June held even at 2.8 percent, just 0.1 percentage points below a record high set in April.
Layoffs also dipped from 1.4 million in May to 1.3 million in June, while the percentage of the workforce that was laid off stayed even at 0.9 percent.
“The outlook for economic growth may not be as rosy as it was a few months ago, but there’s no sign of imminent danger in the labor market,” wrote Nick Bunker, director of economic research at the Indeed Hiring Lab. He noted that the layoff rate has been below it’s pre-pandemic record low for 16 consecutive months.
“The labor market remains hot. A continued slow cooldown would be more than manageable.”
Fed officials and economists are hopeful that job openings will continue to fall quickly enough to reduce some of the pressure in the labor market.
The glut of job openings has helped fuel rapid wage growth. But economists are concerned it is also pushing inflation higher and making it harder for some businesses to handle a challenging stretch for the global economy.
Inflation has remained above four-decade highs even after a series of rapid interest rate hikes by the Fed. If inflation continues to rise, the Fed may raise interest rates to a level that halts job growth entirely in order to prevent prices from rising faster.
Such a move would not only drive the economy into recession, but likely thrust Democratic chances of retaining control of Congress in the 2022 midterms — which are already low — into danger.
A recession would also almost certainly imperil President Biden’s chances of getting reelected in 2024.
“It often takes months for the entire impact of a slowdown to spread across every corner of the economy,” Tuan Nguyen, U.S. economist at RSM, wrote in a Tuesday analysis.
“That should put some pressure on small and middle market firms to be on high alert when it comes to hiring strategies as the chance of a recession continues to increase.”
Updated at 5:06 p.m.