Job Market Shows Strength with Surge in Openings and Hiring in May

The number of job openings in the United States unexpectedly rose in May, offering a reassuring sign for the economy ahead of the June jobs report. According to new data from the Bureau of Labor Statistics released on Tuesday, there were 8.14 million job openings at the end of May, up from 7.92 million in April. The April figure was revised down from an initial report of 8.06 million.

Labor Market Steadies

Economists had anticipated 7.95 million job openings for May. This unexpected surge in job openings comes as the labor market has been closely watched in recent weeks. Rising weekly jobless claims and a steady increase in the unemployment rate have fueled concerns about a weakening labor market. However, the new data suggests that any significant downturn may still be some time off.

The Job Openings and Labor Turnover Survey also reported 5.8 million hires in May, a slight increase from April. The hiring rate remained unchanged at 3.6%. The quits rate, which reflects worker confidence, remained stable at 2.2%.

Job Openings to Unemployed Workers Ratio

The ratio of job openings to unemployed workers stayed at 1.2, aligning with pre-pandemic levels. This supports the idea that the labor market is normalizing rather than fully cooling off.

San Francisco Fed President Mary Daly, in a speech on June 24, noted that the labor market is moving towards a point where a “benign” slowdown might be less likely. Daly indicated that further declines in job openings would likely lead to an increase in the unemployment rate. However, the latest data shows the job openings rate edged up to 4.9% from 4.8% the previous month.

“At this point, inflation is not the only risk we face,” Daly said. “We will need to keep our eyes on both sides of our mandate — inflation and full employment — as we work to achieve our goals.”

Upcoming Labor Market Report

The next major update on the labor market will come with Friday’s nonfarm payroll report from the BLS. Bloomberg data predicts that the report will show 195,000 nonfarm payroll jobs added in June, with the unemployment rate remaining at 4%.

Bank of America US economist Michael Gapen commented that such a report would suggest a labor market that is “cooling but not cool.”