According to the most recent data on job opportunities and labor turnover, there are more positions than ever before, but hiring is slowing. On a recent day in Queens, N.Y., an assistance wanted sign.
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In May, job postings reached a record high, while hiring decreased for the first time since the beginning of the year, adding to the growing indications that labor supply restrictions are slowing the labor market rebound. According to the Labor Department’s Job Openings and Labor Turnover Survey, the number of empty jobs increased by 16,000 to a new series high of 9.21 million, which dates back to 2000. The job vacancies rate remained at a record high of 6.0 percent as a result. For reference, according to the June jobs data released separately by the Labor Department last week, payrolls are still down 6.8 million from pre-pandemic levels.
While the most recent increase was modest, May marks the third consecutive month of record job opportunities as the economy reopens and demand for labor heats up, according to Daniel Zhao, Glassdoor’s economist.
Actual hiring plummeted 85,000 in May, reflecting the difficulty many firms experience in attracting the proper people.
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In Wednesday’s report, the quit rate dropped down to 2.5 percent, where it was in March, after reaching a new high of 2.8 percent in April. While the large decline is unexpected, Zhao points out that quits are still high when compared to pre-pandemic levels and the recovery from the Great Recession. One interpretation of the drop is that people are less optimistic about better employment prospects and salary, thus they are staying put. There’s a different way to look at things. According to Zhao, the fact that the quit rate declined as job postings reached a record high indicates that it is taking more to encourage people to switch jobs. According to Zhao, “this data gives some evidence of increased wage growth,” implying that firms may have to raise wages in order to hire. Wage growth slowed to 0.3 percent from 0.4 percent a month earlier, according to Friday’s jobs report, though some economists believe the number is misleading. According to Aneta Markowska, an analyst at Jefferies, average hourly earnings grew by 0.5 percent in June from May after accounting for the return of low-wage leisure, hospitality, and retail workers. They are up 4.5 percent from a year ago in this regard. Overall wages have increased by 6% on an annualized basis during the last three months. A decline in layoffs in May illustrates the tight labor market even more. Employers are increasingly hesitant to let go of help as client demand surges and labor shortages abound, as layoffs continued to drop during the month, hitting a series low of 0.9 percent. “Employers are hesitant to lay off when hiring new staff and retaining old ones is difficult,” Zhao explains. This is especially true in a labor market with limited supply and rising pay. Economists predict that the latest statistics, together with the June nonfarm payroll report, will keep markets cautiously hopeful about the labor market rebound. “While we predict a great labor market performance this year, with the economy expected to recuperate a total of 8 million jobs,” says Lydia Boussour of Oxford Economics, “the restoration to a pre-Covid environment will not happen overnight.” “As the economy gradually adjusts to a new post-pandemic normal, we should expect labor demand and labor supply to be lumpy in the second half of the year,” she says. Lisa Beilfuss can be reached at lisa.beilfuss@barrons.com./n
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