The hot labor market could be starting to soften, as U.S. employers posted 10.7 million job openings in June, tapering off a bit from previous months.
Job openings eased in June, reflecting early signs of slowdown
The June data follows several months of record-high job openings and quit rates, which marked the high point of the hot labor market, as employers scrambled to find workers amid shortages across many sectors. June’s figures continue to reflect a strong labor market.
“June was a pivotal month for the labor market,” said Julia Pollak, a labor economist at ZipRecruiter. “There were interest rate hikes, the stock market entered a bear market, industrial output was negative, and consumer spending slowed. A whole number of key recession indicators flipped.”
The slowing down in the labor market is related to mounting head winds in the economy. Inflation has soared to a 40-year high, which is weighing on many companies and households. In response, the Federal Reserve has raised interest rates four times this year, including by three-quarters of a percentage point in July.
The Fed is aiming to bring prices down, but that work is expected also to push the unemployment rate to rise from 3.6 percent to 4.1 percent. The Fed’s goal is to reduce the number of job postings and hirings without triggering a massive wave of job losses.
“What we’re seeing in June will get quite a bit worse in July,” Pollak said. “That’s because [the Fed] is throwing a lot of cold water on the economy generally and causing a huge amount of uncertainty.”
A record number of Americans quit their jobs over the past year, in a phenomenon known as the Great Resignation, as a hot labor market spurred by the pandemic afforded them leverage to find better-paying opportunities, particularly in leisure and hospitality. But data suggests that this era may be coming to a close. Although the rate at which workers are quitting their jobs is still elevated, Americans are no longer pursuing other opportunities at the same pace.
“Quits are still very elevated historically, but they are not accelerating,” said Kory Kantenga, a senior economist at LinkedIn. “There’s a lot of uncertainty about whether there is going to be a recession, and people don’t quit their jobs during recessions.”
The number of unemployment claims also ticked upward in June, and job growth slowed, especially in the tech industry. Netflix, MasterClass and Coinbase let go of hundreds of employees in June. Those layoffs accelerated in July, with Ford and 7-Eleven letting go of 7,000 and 880 workers, respectively, and Meta and Apple announcing hiring freezes.
Stefan Hayden, a front-end software developer in New Jersey, received a termination email on July 20 from his job at the cloud-based music platform Splice.
“I was personally caught off-guard. I don’t know if I was looking at the right indicators,” Hayden said. “But if other tech companies are having problems raising money and making growth numbers, I could only imagine Splice is, too.”
Hayden said that he has had no trouble finding new job opportunities in software development. In fact, he said, he’s overwhelmed by the number of open positions and the recruiters getting in touch with him.
“The tech industry is still looking pretty good,” Hayden said. “Some small companies are feeling the squeeze, but a lot of companies are still growing and hiring. I have a long list of places that are hiring, and I’m in a very good position. That seems to be [the case with] other developers and tech workers.”
Source: WP
