Job Openings Picked Up in July, Showing the Labor Market Remains Hot
Demand for workers remained strong in July, a sign that the U.S. labor market remains vibrant even as the Federal Reserve tries to cool the economy by raising interest rates.
Job openings ticked up to 11.2 million, the Labor Department reported on Tuesday as part of its monthly Job Openings and Labor Turnover Survey, or JOLTS.
The survey included a large upward revision for openings in June, to 11 million from an estimated 10.7 million. The figure reached a record of more than 11.8 million in March.
Substantial aid during the pandemic’s ups-and-downs has kept businesses of all sizes afloat and household finances relatively healthy, resulting in robust demand for a broad variety of goods and services. But the labor force is still smaller than it was before the pandemic, forcing employers to scramble to hire.
Openings outnumber unemployed workers by a ratio of two to one.
The largest increases in openings were in transportation, warehousing and utilities jobs. In a sign of continued recovery, postings surged in the arts, entertainment and recreation industries, which have greatly benefited from the easing of Covid-19 concerns and restrictions.
The State of Jobs in the United States
Employment gains in July, which far surpassed expectations, show that the labor market is not slowing despite efforts by the Federal Reserve to cool the economy.
Several prominent companies announced layoffs this summer. But both the overall rate and number of layoffs have been flat on a monthly basis, while the recently elevated rate of quitting declined only slightly in July, showing that workers remain able to leave jobs they find unsatisfying.
There were some signs of weakness, however. The survey found that job openings decreased in durable-goods manufacturing by an estimated 47,000. Some economists say this is unsurprising after the intense consumer demand for goods at the beginning of the pandemic. But it may also be an early mark of tighter financial conditions as a result of the Fed’s bid to rein in price increases.
Economists and bank analysts said the report made it likely that the Fed would remain aggressive in raising interest rates, as the central bank tries to weaken the labor market so that wage gains and consumer spending, which have slowed, will dip further in better alignment with the supply-constrained economy.
“The job market remains surprisingly resilient to the Fed’s best efforts to cool it off,” said Mark Zandi, the chief economist at Moody’s Analytics. “The Fed desperately wants job growth to slow and unemployment to stabilize, even rise a bit, to quell wage and price pressures.”
The Labor Department’s employment report for July was unexpectedly strong, showing a gain of 528,000. Mr. Zandi said the “red hot” JOLTS data would put even greater focus on the August hiring data, due Friday.
The demand for labor is particularly remarkable because, based on inflation-adjusted gross domestic product, the economy contracted slightly in the first half of the year. Despite higher prices, the raw amount of goods and services being exchanged remains considerable, fueling demand for labor.
“Millions of Americans still can find employment or even trade up to a higher-paying position,” said Robert Frick, an economist at Navy Federal Credit Union. “We may be seeing a second wind for economic growth after high inflation and slowing job growth in the spring.”
Some commentators say the data on openings may be somewhat overstated because businesses have little incentive to take down listings, even if the urgency of hiring has waned.
And there are signs that the tide may be shifting. A survey of more than 100 chief financial officers by Deloitte, a consulting and financial advisory firm, showed that nearly all of them expected decreases in revenue, hiring and overall expansion in the coming year.
Their growth expectations for wages and staffing declined. They expect annual wage growth to be 4.8 percent and personnel growth to be 2.6 percent — both down from 5.3 percent in the previous quarterly survey.
The Fed is also making a mark in corporate financing, which can affect hiring capacity or decisions: Roughly one in 10 chief financial officers at public companies viewed debt financing as attractive, down from nine in 10 a year ago.
Still, executives remained relatively confident about the prospects for their own businesses, a disconnect that mirrors how consumers have maintained a gloomy economic outlook across the board while people in most income brackets continue to spend at heightened levels.
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