Manufacturing activity contracted for the ninth month in a row

Job vacancies and layoffs decreased in June, according to a report on Tuesday, pointing to a stable labor market.

In its monthly report, the Labor Department said a total of 9.58 million jobs were opened this month, down from a revised 9.62 million in May. Job Openings and Labor Turnover Survey, This was the lowest level of openings since April 2021 and well below FactSet’s estimate of 9.7 million.

Along with this, the JOLTS report said that layoffs declined to 1.53 million after totaling 1.55 million in May.

Economists were watching the two data points closely for clues about the direction of the labor market, which has proved surprisingly resilient despite a series of interest rate hikes from the Federal Reserve aimed at slowing the economy and inflation. .

“It’s definitely going in a Goldilocks direction,” said Rachel Cederberg, senior economist at labor analytics firm Lightcast. “We still have a long way to go, and we still have a huge number of openings, especially compared to where we were before the pandemic. But we’re going in the right direction and we’re doing so in peace The way we want to see.”

The decline in both job openings and layoffs indicates that labor demand is slowing more slowly than the Fed expects, while companies are still retaining workers, indicating that the unemployment rate may soon rise. Not likely to grow.

The JOLTS report is a leading indicator for the Fed as it considers what to do next after raising interest rates by a total of 5.25 percentage points through March 2022.

“A variety of economic data suggest the US economy was in tatters in the second quarter. The June JOLTS data is no exception,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “The current recession may be too slow for many of the Federal Reserve’s policy makers, as job opportunities are slowly shrinking. But workers have a lot to celebrate and still have substantial benefits “

The June total number for job openings represents a decline of nearly 1.4 million, or 12.6%, from the same period a year earlier. According to Labor Department data, there are now about 1.6 job openings for every available worker.

Opportunities in state and local government rose, except in health care and social assistance as well as education, and declined in transportation, storage and utilities, and state and local government education.

Along with the decline in vacancies and layoffs, hiring also declined to 5.9 million, a decline of 0.2 percentage points as a share in total employment. Quits also fell significantly, with a decline of nearly 300,000, or 0.2 percentage points.

manufacturing is still in contraction

A separate report on Tuesday showed that the manufacturing sector, which reported a decline in both job openings and hiring for June, was still in contraction during July. ISM Manufacturing Index A reading of 46.4 was recorded, representing the percentage level of companies reporting expansion versus contraction. A level below 50 indicates contraction.

The index moved up this month but was slightly below the 46.8 Dow Jones estimate. A 3.7 point decline in employment was the main factor holding the index back, as new orders, production and inventories all showed gains from June.

“The widely anticipated boost from China’s reopening remains little, and more generally, we see few signs of any near-term improvement in the outlook,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

While the decline in manufacturing employment is unlikely to have a major impact on headline payroll numbers, the ISM report reflects an ongoing shift from goods to services consumption in the post-Covid-era recovery.

For a full economic picture, economists will turn their attention to a slew of reports over the rest of the week — the ADP private sector hiring release due on Wednesday, weekly jobless claims on Thursday and the key non-farm payrolls report on Friday. The July jobs report is expected to show an increase of 200,000 from less than 209,000 in June, with the unemployment rate holding steady at 3.6%.

Leave a Reply

Your email address will not be published. Required fields are marked *