U.S. job openings dipped in May but remained well above the typical pre-pandemic level, indicating the labor market remains surprisingly tight even in the face of higher interest rates.
The Labor Department said Thursday that there were 9.8 million job openings at the end of May, down from the upwardly revised 10.3 million openings reported in the previous month. Economists surveyed by Refinitiv expected a reading of 9.93 million.
Despite the decline, job openings remain historically high: Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million. There are still roughly 1.7 jobs per unemployed American.
"The report points to a robust and resilient labor market with 40% more job openings, 21% fewer monthly layoffs and discharges, and 15% more employee-initiated quits (most for better jobs) than before the pandemic," said Julia Pollak, ZipRecruiter chief economist.
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The Federal Reserve closely watches these figures as it tries to gauge labor market tightness and wrestle inflation under control. The figure indicates that demand for employees still far outpaces the supply of available workers.
The central bank responded to the inflation crisis and the extremely tight labor market by raising interest rates at the fastest pace in decades. Officials approved 10 straight rate hikes over the course of 15 months and have hinted that another increase is on the table at their July meeting amid signs of inflationary pressure within the economy.
The latest jobs data, coupled with other evidence of a tight labor market, could give policymakers more space to hike again. Traders are now pricing in a 92% chance of another quarter-percentage-point increase during the Fed's July 25-26 meeting.
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"The data leading up to Friday’s big employment release are pointing to another healthy jobs report," said Jeffrey Roach, chief economist at LPL Financial. "Unless Friday’s report is much weaker than expected, the Fed will not likely change its plans to increase rates during the next regularly scheduled meeting later this month."
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The number of Americans quitting their jobs, meanwhile, unexpectedly jumped to 4 million, or roughly 2.6% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.
Switching jobs has been a windfall for many workers over the past year: Roughly 49% of job-switchers saw their real hourly wage increase faster than inflation last year, compared with just 42% of workers who stayed in the same job, according to recent Atlanta Fed data.
