Source: Economics Group of Wells Fargo Bank, N.A.
Summary
On net, the JOLTS data point to a labor market that has normalized, but which does not look to have turned the corner into outright weakness. Job openings declined in June to 8.18 million from an upwardly revised 8.23 million in May, putting the level of postings about 10% lower today than would be implied by its 2008–2019 trend. The layoff and discharge rate ticked down to 0.9% in a sign that demand for existing workers continues to hold up despite demand for new workers fading.
Even as the JOLTS data evidence a labor market cooling at a manageable pace, cautionary flags continue to be waved. Labor demand remains concentrated in just a few industries, workers are hunkering down and feeling less confident about job availability, and businesses are more reluctant to bring on new hires. The extent to which reduced turnover in the labor market is weighing on labor costs will be shown in tomorrow’s Q2 Employment Cost Index release, which we expect to verify that the labor market is no longer adding to upward pressure on inflation.
Gradual Slide in Openings Masks Freezing Turnover
While net job growth has remained solid, demand for new workers continues to ebb. Job openings at the end of June fell to 8.18 million from an upwardly revised 8.23 million in May. Unchanged at 4.9%, the opening rate (job openings as a share of total employment and openings) has fallen from its current cycle peak of 7.4% registered in March 2022 but is still somewhat elevated relative to the 4.5% averaged over 2019.