Key Takeaways
- The job market cooled in June as employers hired fewer people than at any time since the pandemic struck.
- Despite the slowdown, fewer people were laid off, suggesting the labor market isn’t crashing, at least for the moment.
- The report could help encourage officials at the Federal Reserve to cut interest rates in September, as many financial market participants expect.
Your company’s human resources department might not be too busy these days: There hasn’t been this little hiring and firing going on since the early days of the pandemic.
Employers hired 5.3 million people in June, the fewest since the onset of the pandemic in 2020, and before that, the fewest since 2016, the Bureau of Labor Statistics said Tuesday. The number of layoffs fell to 1.5 million, down from May and the lowest since 2022.
Job openings were still plentiful, with 8.2 million openings in June, the same as in May. That meant there were 1.2 open positions for every unemployed worker, similar to the pre-pandemic ratio. There were more openings than forecasters expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.
Despite lots of openings, the number of people quitting jobs fell to the lowest since the pandemic, suggesting workers got less confident they could switch jobs for higher pay.
The Job Openings and Labor Turnover Survey provided a more detailed snapshot of the job market’s recent slowdown trend than the more widely watched nonfarm payrolls report, which tracks the overall change in the number of people employed and will be released Friday. Overall, it paints a mixed picture of a labor market cooling off from its feverish post-pandemic state, but not collapsing.
Cooler Job Market Clears The Way For Lower Interest Rates
Officials at the Federal Reserve have been closely watching job-market data for signs that the uptick in unemployment could snowball into widespread job losses.
Policymakers at the central bank have grown more concerned that its campaign of anti-inflation interest rate hikes meant to slow the economy and stifle inflation is starting to bite into the job market. Fed leaders are weighing when to lower the benchmark fed funds rate from its current 23-year high, and financial market participants widely expect that to happen in September.
In the wake of Tuesday’s report, officials at the Fed will likely “see no reason here to rush a rate cut, but no reason either not to signal that one is potentially coming in September,” Conrad DeQuadros, chief economic adviser at Brean Capital, wrote in a commentary.