Many eyes are on the jobs market, especially given some prevalent opinions that—rightly or wrongly—blame inflation on higher wages and low unemployment.
Ahead of the government jobs numbers that will come tomorrow morning, here are some indicators that offer indications of what might be happening.
First, the job openings and labor turnover summary, or JOLTS report, came out from the Bureau of Labor Statistics on Wednesday. An important one but normally delayed, as the newest one is for May, the report said job openings had decreased to 11.3 million at the end of that month.
There were 6.5 million hires and 6.0 million separations, the latter comprising 4.3 million people who quit their jobs and 1.4 million that had been discharged. Both sets were little changed from the previous month. As the Wall Street Journal noted, layoffs were up slightly at 1.4 million from 1.3 million in April, but still below pre-pandemic levels.
If hires and separations remained about the same, a reasonable question is how job openings could have decreased. Perhaps companies gave up on some portion of new positions, either because they seemed unfillable or, as is happening in many businesses, hiring freezes are in force because of fears of recession, shutting out opportunities. Or it in theory could be a quirk of sampling or even a lag between May and as-yet unreported numbers for June.
A complicating factor is the number of unemployed people per job, which according to government numbers was at a 21-year low of 0.6 at the end of 2021. A GlobeSt.com analysis of data available through the St. Louis Fed’s FRED find that the number in May was about 0.53. Even with a significant change between that month and June, there is still a large mismatch between the number of open jobs and the number of people available to fill them. Job openings were at 11.3 million, much higher than the roughly 7 million at the end of 2019, before the pandemic.
There may have been a significant change in June. LinkedIn said that it saw hiring fall 5.4% from May to June on a seasonally adjusted basis, according to Fox Business. That is based on the company’s own calculations of the rate at which people on the platform add new employers, so not necessarily representative of national rates. And Yahoo Finance reported a note from Goldman Sachs saying that the job market is rapidly softening. The bank expects the labor market to slow down significantly in the second half of this year.
Meaning, Friday morning’s report of June employment figures will take on more significance than usual.