Job vacancies hit a new high in May as hires fell for the first time since the start of the year, the latest evidence that labor supply constraints are hampering a faster recovery in the economy. labor market.
Job vacancies edged up 16,000 to new high (back to 2000) of 9.21 million, the Labor Department’s survey of job openings and turnover showed on Wednesday. This left the vacancy rate stable at a record 6.0%. For context, the payroll is still down 6.8 million from pre-pandemic levels, according to the June jobs report released separately by the Labor Department last week.
While the latest increase was modest, May is the third consecutive month of record job openings as the economy reopens and demand for workers warms, said Daniel Zhao, an economist at Glassdoor. Reflecting the challenge many employers face in attracting the right workers, actual hires fell by 85,000 in May.
Also of note in Wednesday’s report: the resignation rate fell back to 2.5%, where it was in March, after jumping to a record 2.8% in April. While the sharp drop comes as a surprise, dropouts are still high from pre-pandemic levels and from the recovery from the Great Recession, Zhao said.
One way to interpret this decline is that workers are a little less optimistic about better job opportunities and better wages and therefore stay put.
There is another way of looking at it. Zhao says that the fact that the quit rate fell as job vacancies hit an all-time high suggests that more is needed to entice workers to quit one job for another.
“This report provides evidence of high wage growth,” Zhao said, which means employers may have to increase wages to hire.
Friday’s jobs report showed wage growth slowing, at a rate of 0.3% from the previous month, although some economists say the number may be misleading. After adjusting for the return of low-wage leisure, hospitality and retail workers, average hourly earnings rose 0.5% in June from May, noted Aneta Markowska, an economist at Jefferies. According to this measure, they are up 4.5% from the previous year. Over the past three months, overall salaries have increased by 6% on an annualized basis.
A drop in layoffs in May also reflects a tight labor market. Layoffs continued to decline during the month, hitting a serial low of 0.9% as employers increasingly reluctant to abandon help as customer demand soars and labor shortages. works abound.
“Employers are loath to lay off when it is very difficult to hire new employees and keep existing ones,” Zhao says. This is especially true in a labor market where supply is limited and wages are already rising.
Looking ahead, economists say the latest data coupled with the June non-farm payroll report should, overall, keep investors cautiously optimistic about the labor market recovery.
“While we forecast an excellent labor market performance this year with an economy expected to recover a total of 8 million jobs, the return to a pre-Covid environment will not happen overnight,” says Lydia Boussour from Oxford Economics. “We need to prepare for the chaotic demand and supply of labor in the second half of the year as the economy gradually returns to a new post-pandemic normal,” she said.
Write to Lisa Beilfuss at [email protected]