US job openings rise to 5.62 million in June; labor market outlook modestly positive

The US Jobs Openings and Labor Turnover Survey (JOLTS) report for the month of June indicates that job openings rose to a record high at the end of the second quarter, whereas hires steadied following a drop for three straight months. Job openings increased 110,000 to 5.62 million in June, whereas hires rose to 5.13 million in the month.

The rise in job openings was quite widespread throughout goods and service providing sectors. Construction and manufacturing sectors recorded 15,000 and 27,000 job openings respectively. This reading implies certain stabilization in demand for labor from the industrial sector, noted Barclays in a research report.

In the service sector, health care and social assistance registered 36,000 openings, while professional and business services registered 22,000 openings. These two sub sectors had the largest rise. The stabilization in hiring came mainly from leisure and hospitality and manufacturing, which recorded a rise in hires of 36,000 and 15,000 respectively.

On the contrary, construction recorded a drop in hires of 43,000 in spite of the rise in openings. Overall, the openings and hires rates rose 3.8 percent and 3.6 percent respectively in June.

Meanwhile, the overall separations rate dropped by one-tenth to 3.4 percent; however, the quits rate remained the same at 2 percent. This implies stable labor market sentiment, added Barclays. Elsewhere, the total number of unemployed job seekers per job openings was the same at 1.38 and suggests that the slack in labor market has not altered much in the last few months.

The June JOLTS data suggests that the labor market outlook is modestly positive. Demand (openings) continues to increase, while hiring has steadied after tentative signs of a deceleration. Labor markets overall are fairly tight. Given that the labor market turnover is stable and demand rising, additional employment gains are expected to lead to a modest rebound in wage growth and better rates of household income growth, according to Barclays.

“This expectation underpins our outlook for gradually rising core inflation and steady consumption growth in the coming quarters,” added Barclays.