Job openings revert to 2021 levels

June 4, 2024

Total job openings in the US declined to 8.1 million in April 2024 from 8.4 million the previous month. That is the lowest number since February 2021. Openings are down from over 12 million in March 2022 but still above the 2019 baseline monthly average of 7.2 million. Real-time data from Indeed Hiring Lab show that job postings continued their downward trend in April and May, suggesting openings may decline further in the months ahead. This is a sign that the labor market has come back to earth after the unusual strength starting in 2022.

Job openings declined slightly in the private sector. Gains in professional and business services rose 122,000 while private educational services added 50,000; they were offset by losses in health care and social assistance (down 204,000) and leisure and hospitality (down 109,000). Openings similarly were down slightly in the public sector, driven by a decline in state and local government (down 67,000).

Health care and social assistance, leisure and hospitality and state and local government are the three sectors that have led job gains since mid-2023. They may be cooling after running hot for the past year. It could be a sign of labor market strength if a broader set of industries create jobs, leaving the economy less reliant on those three sectors.

The ratio of job openings to unemployed job seekers, an indicator of balance in the labor market tracked closely by Federal Reserve officials, ticked down to 1.2. That is the lowest rate since June 2021. It has declined from 2.0 in March 2022 and is now just a touch above the 2019 baseline average; it points to the continued normalizing of the labor market.

Total hires remained roughly flat at 5.6 million, with slight gains in the private sector offset by slight losses in the public sector. Despite an increase in job openings in professional and business services, hires were down 52,000. Hires rose in several goods industries, including manufacturing (up 68,000), wholesale trade (up 31,000) and transportation (up 43,000). After several weak quarters, these industries may be bouncing back. That points to a broader labor market expansion across different industries.

Hires declined in state and local government (down 9,000). As several states have budget deficits starting in fiscal year 2025, hires may be muted starting in the second half of this year.

The quits rate remained at 2.2% for the sixth straight month. That is below the 2019 baseline monthly average of 2.3%. Quits were basically flat in both the public and private sectors overall. They decreased in professional and business services (down 131,000), pointing to a tighter labor market and lack of confidence in changing jobs for some white collar workers. Quits increased in health care and social assistance (up 48,000). That shows the rebalancing of the sector after a strong twelve months. Data from ADP show that the wage premium for switching jobs remains elevated at 9.3%. This could signal an increase in quits in the months ahead.

Layoffs and discharges inched down to 1.5 million while the rate stayed at 2.2% for the sixth straight month. Layoffs declined slightly in both the public and private sectors. The Labor Leverage Ratio, a proxy for worker bargaining power, increased month-over-month to 2.31 and remains higher than the 2019 baseline average of 1.94. That suggests the job market is still relatively favorable for employees.