The US labour market, previously entrenched in a state characterised by minimal hiring and firing, appears to be exhibiting signs of potential improvement. The latest official labour turnover data indicated that employers increased their hiring efforts in June – a marginal sign that momentum could be building. The number of job openings had trended higher in April and May, indicating employers’ appetites were growing to expand their workforces; however, hiring remained muted. That began to shift somewhat in June, as indicated by the latest Job Openings and Labour Turnover Survey released Tuesday by the Bureau of Labour Statistics: Hiring activity, while historically muted, reached a three-month peak during that month.
The number of job openings decreased slightly to 7.36 million, yet it continues to exceed the levels observed in the previous year. The number of layoffs remained largely stable, while voluntary quits, which serve as a gauge of employee confidence, increased to a six-month peak. “Put together, the labor market is finding steadier footing,” Nicole Bachaud wrote Tuesday. However, numerous unpredictable factors persist, including heightened inflation, continuing uncertainty, and geopolitical instability. “Hires ticking up even as postings slow is the kind of detail that keeps this from reading as a market losing steam,” Bachaud added. “Whether that holds through the summer will depend a lot on whether prices and consumer spending stabilize or keeps sliding.”
Economists anticipated a decline in the estimated number of available jobs, a key indicator of labour demand, predicting a drop in June to 7.4 million from May’s initial estimate of 7.594 million openings. Tuesday’s data marks the initial release in a sequence of vital economic indicators pertaining to the labour market, culminating with the July jobs report scheduled for Friday morning. The June hiring uptick was primarily influenced by sectors including construction and manufacturing, according to data. Both sectors exhibited growth in job openings. Job openings contracted significantly in sectors including wholesale trade, healthcare, and leisure and hospitality.
Nonetheless, the hiring upswing reflected in Tuesday’s report does not significantly alter the prevailing narrative that the US labour market has effectively transitioned from its low-momentum phase, according to Dan North, senior economist with Allianz Trade. “The wheels are not coming off the bus; there’s certainly not negative job growth at the moment,” North said in an interview. However, the majority of that job growth is attributed to the healthcare sector, and there has also been a noted decline in participation rates, he added. “It’s stable, somewhat solid, but there are signs of decay and shakiness underneath,” North added.