U.S. job openings fall slightly to 8.2 million as high interest rates slowly cool a hot labor market
FILE - A utility crew works at a site in Chicago on June 27, 2024. On Tuesday, July 30, 2024, the Labor Department reports on job openings and labor turnover for June. (AP Photo/Nam Y. Huh, File)
WASHINGTON (AP) — U.S. job openings fell slightly last month, a sign that the American labor market continues to cool in the face of high interest rates.
There were 8.18 million job vacancies in June, down from 8.23 million in May, the Labor Department reported Tuesday. The June number was stronger than expected: Forecasters had expected 8 million job openings.
Still, the report showed other signs of a slowing job market. Employers hired 5.3 million people, fewest since April 2020 when the pandemic was hammering the economy. The number of people quitting their jobs — a decision that reflects confidence in their ability to find higher pay or better working conditions elsewhere — slid to 3.3 million, fewest since November 2020.
But layoffs dropped to 1.5 million, lowest since November 2022 and down from 1.7 million in May, a sign that employers remains reluctant to let go of staff.
Vacancies rose at hotels and restaurants and at state and local governments (excluding schools). Openings fell at factories that make long-lasting manufactured goods and at the federal government.
The U.S. economy and job market have proven remarkably resilient despite the Federal Reserve’s aggressive campaign to tame inflation by raising its benchmark interest rate to a 23-year high. But higher borrowing costs have taken a toll: Job openings peaked in 12.2 million and have come down more or less steadily ever since.
Still, 8.2 million is a strong number. Before 2021, monthly job openings had never topped 8 million.
“Labor demand is cooling though still strong, and firms continue to be extremely hesitant to lay anyone off in the wake of the acute labor shortages of 2021 and 2022,″ Stephen Stanley, chief economist at Santander, said in a research note.
The Fed views a drop in vacancies as a relatively painless way — compared to layoffs — to cool a hot job market and reduce pressure on companies to raise wages, which can feed inflation.
Job growth has slowed, too. So far this year, employers are adding an average 222,000 jobs a month. That is a healthy number but down from an average 251,000 last year, 377,000 in 2022 and a record 604,000 in 2021 as the economy roared back COVID-19 lockdowns.
The Labor Department releases July numbers on job creation and unemployment on Friday. According to a survey of forecasters by the data firm FactSet, the economy likely created 175,000 jobs in July, decent but down from 206,000 in June. The unemployment rate is forecast to have stayed at a low 4.1%.
The Fed is widely expected to leave interest rates unchanged at its meeting this week but to begin cutting them at its next gathering in September.