- Job openings unexpectedly rose to 11.2 million in July, according to new government data.
- The print snapped a three-month streak of declines and landed above the 10.5 million-opening estimate.
The economy is slowing down, but hiring managers don't seem to have gotten the memo.
Job openings in the US unexpectedly rose to 11.2 million in July from 11 million, the Bureau of Labor Statistics announced Tuesday. Economists surveyed by Bloomberg expected openings to fall to 10.5 million. The uptick snaps a three-month streak of declines and erases much of the drop seen through June.
June openings were revised to 11 million from 10.7 million, according to the report.
Openings rose the most in the transportation, warehousing, and utilities sector, with such firms adding 81,000 listings last month. The arts, entertainment, and recreation sector added 53,000 openings, and the federal government followed with an increase of 47,000 roles.
Durable goods manufacturers — producers of long-term items like cars and furniture — shed 47,000 openings, marking the largest one-month decline of any sector.
The surprise increase in nationwide openings, when coupled with the June revision, signals the labor market's imbalance won't be as easy to close as recent months' data suggested. Job openings have handily surpassed the number of available workers through much of the pandemic as businesses scramble to rehire and various factors keep Americans from returning to the workforce. The spring decline hinted that the labor shortage could be reversing course as jobless Americans were matched with openings. Yet the latest print reveals the shortage is stickier than expected, and that companies are still firmly in hiring mode.
Increased labor demand also flies in the face of the broader economic backdrop. Gross domestic product shrank through the first half of the year as the rapid growth pace of 2021 crashed into higher inflation and easing consumer demand. Should growth continue to stall, weaker revenues could push companies to slow their hiring plans and even cut costs by laying off workers.
A recession would intensify those trends, and while the US doesn't seem to be in a downturn today, the jury is still out on whether one could soon emerge.
The Federal Reserve has also been raising interest rates at the fastest pace since 1980 in an aggressive bid to cool demand and slow inflation. Higher rates make companies' debts more costly. With the central bank hinting that it's nowhere near done with its hiking cycle, the hiring environment is set to only get tougher.
Fed Chair Jerome Powell said as much on Friday, adding that the labor shortage risks keeping inflation elevated should it persist.
"There will very likely be some softening of labor market conditions," he said."The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers."
It will take some time for the supply-demand gap to close. There were roughly two job openings for every available worker in July, according to BLS, extending a streak that began in March. Such strong demand for workers is usually only observed at the end of an economic expansion, underscoring just how unusual the current labor market is.
Quits data, however, signaled the workforce is returning to a more normal state. The quit rate slowed to 2.7% from 2.8% in July, marking the lowest reading since May 2021. Americans tend to quit when they believe they can easily find a new job with better pay, working conditions, or benefits. The continued slowdown suggests workers are settling into the workforce more than before, despite job openings lingering near record highs.