June saw a slight decrease in job vacancies and layoffs, reflecting a stable labor market, as stated in a report released by the Labor Department on Tuesday.
The report, named the Job Openings and Labor Turnover Survey, revealed that employment openings totaled 9.58 million in June, slightly down from the revised figure of 9.62 million in May. This marked the lowest number of job openings since April 2021 and fell below the estimate of 9.7 million from FactSet.
In addition, the report indicated that layoffs decreased to 1.53 million in June, compared to 1.55 million in May.
Economists closely monitored these figures to gain insights into the labor market’s direction, which has shown unexpected resilience despite multiple Federal Reserve interest rate hikes aimed at slowing the economy and inflation.
The decline in both job openings and layoffs suggests a slowdown in labor demand as desired by the Fed. However, companies are still retaining workers, indicating that the unemployment rate is unlikely to spike in the near future.
The JOLTS report is a vital indicator for the Fed as it determines its next steps after raising interest rates by a total of 5.25 percentage points since March 2022.
Compared to the same period last year, job openings in June decreased by nearly 1.4 million, or 12.6%. Labor Department data shows that there are currently about 1.6 job openings for every available worker.
Job openings increased in the health care and social assistance sectors, as well as state and local government sectors excluding education. Conversely, job openings declined in transportation, warehousing, utilities, and state and local government education.
Alongside the decrease in job openings and layoffs, there was also a decline in hiring, which dropped to 5.9 million, representing a 0.2 percentage point decrease as a share of total employment. Additionally, there was a noticeable decrease in quits, which fell by nearly 300,000 or 0.2 percentage point.
Manufacturing still in contraction
Another report released on Tuesday revealed that the manufacturing sector, which experienced declines in both job openings and hires in June, continued to contract in July. The ISM Manufacturing Index reported a reading of 46.4, indicating the percentage level of companies reporting contraction rather than expansion. A reading below 50 signifies contraction.
The index slightly exceeded expectations for the month but remained slightly below the 46.8 estimate from Dow Jones. The main factor holding back the index was a 3.7-point decline in employment, although new orders, production, and inventories all saw gains compared to June.
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