A cooldown in the job market is underway: The number of job openings dropped in June while near-record numbers of people continued to quit and get hired into new roles, according to the Labor Department’s latest Job Openings and Labor Turnover Summary.
The labor market posted 10.7 million new job openings in June, which is down from 11.3 million in May but also much higher than a year ago and a more than 50% increase from before the pandemic. Despite the drop, there are still roughly 1.8 open jobs for every person who is unemployed.
Meanwhile, workers are continuing to leverage the market and make moves: 6.4 million people were hired into new jobs, and 4.2 million voluntarily quit — leveling off from record highs but still extremely elevated.
The job market cooldown is “far from a plunge,” says Nick Bunker, director of economic research at Indeed Hiring Lab.
“The labor market is loosening a bit, but by any standard it is still quite tight,” Bunker adds. “The outlook for economic growth may not be as rosy as it was a few months ago, but there’s no sign of imminent danger in the labor market.”
People are concerned about the future of jobs but are still quitting now
Workers are growing more concerned about having their pick of jobs in the months to come, but it’s not stopping many of them from calling it quits right now. The share of people who left their jobs voluntarily in June make up 2.8% of the workforce.
Workers’ confidence in the job market decreased slightly in June and July compared with May, according to a ZipRecruiter index measuring sentiment across 1,500 people. The index also showed an uptick in job-seekers who believe there will be fewer jobs six months from now, a decrease in people who say their job search is going well and a slight increase in people who feel financial pressure to accept the first job offer they receive.
People may also be spooked by headlines of big-name companies, especially ones across tech and housing sectors that saw Covid-era growth, announcing layoffs, hiring freezes and rescinded job offers in recent months.
Bunker recognizes “there are pockets of the economy and labor market going through turbulence,” he says, “but they’re for the most part concentrated pockets.”
These workers may also be getting hired into new jobs pretty quickly. The national unemployment rate held steady at 3.6% in June.
Looking ahead, Bunker expects to see payroll growth and expanding employment in the jobs report out Friday. “If you’re thinking of switching jobs, it’s still a good time,” he says, adding that job-seekers may focus more on going to an industry, sector or employer with a “strong economic outlook.”
A hiring slowdown doesn’t indicate an inevitable recession
In contrast with strong job numbers, economists and consumers alike are worried about a potential recession.
“We have a paradox in our economy because of conflicting signals,” says Andrew Flowers, a labor economist at Appcast and research director at Recruitonomics.
For example, the share of people filing for unemployment insurance has ticked up in recent weeks. But according to the Labor Department’s report, layoffs stayed just under 1% in June, near record-lows.
Bunker says inflation concerns are likely to blame, but reasons for “heightened concern about a recession have not fully materialized yet.”
Flowers says the latest jobs numbers signal more of an economic slowdown than a recession. And even so, lower hiring demand might not result in mass layoffs.
“Should people be worried? Right now, it’s unclear,” Flowers says. “My message to job-seekers and workers is that it’s not clear this economic slowdown will result in a material increase in unemployment.”
He adds: “As the economy shifts to a lower gear of growth, which is the Fed’s intention, that doesn’t mean we’ll suddenly have 10% unemployment.”