Fewer job openings in May

July 24, 2024

Total job openings in the US continued their overall downward trend in May, reaching 8.1 million. This was down from 8.7 million in January and 12.2 million in March 2022. Continued cooling in job openings runs the risk of a wider labor market slowdown.

Job openings declined in three states, stayed roughly the same in 41 states and increased in six. The largest declines occurred in Texas (-76,000) and Tennessee (-22,000). California gained 90,000 job openings, followed by 45,000 in New York and 38,000 in New Jersey.

Real-time data from Indeed show that job postings in many states have plateaued after cooling from highs in late 2021 and early 2022. States including Texas, Ohio and Florida are settling in at levels that are over 10% above the pre-pandemic baseline. That is helping power the resiliency of the labor market.

Though postings in New York and California are currently below that baseline, they are on a slight upward trend. This was reflected in the JOLTS data. The fact that demand has not dropped and is holding steady in these states is good news for the labor market.

The ratio of job openings to unemployed job seekers, a metric of balance between supply and demand in the labor force, remained flat at 1.2 in May. That was almost back to the pre-pandemic baseline average. Large labor markets are at or near that ratio, including New York (1.2), Ohio (1.1) and Texas (1.1). Demand is cooler in California (0.7).

The unemployment rate in the US has risen from 3.7% in January to 4.1% in May. That is a large rise, but the rate is still low by historical standards. Consistent with the national data, from June 2023 to June 2024, the unemployment rate increased in 43 states and Washington DC, decreased in six states and stayed flat in two states. Any additional increases in unemployment will be worrisome for the Federal Reserve and could support the case for cutting interest rates.

Similar to job openings, the hires, quits and layoffs levels and rates changed little in nearly all states in May. New York and Texas had increases in both hires and layoffs. That suggests that companies are rearranging their workforces, possibly in connection with meeting demand for GenAI.

Quits declined while layoffs ticked up in Colorado and Florida, pointing to cooling in those states. ADP data show that the wage premium for switching jobs dropped to 7.7% in June. That is down from 8.1% in December 2023 and 16.4% in June 2022. Workers are staying in their jobs due to the uncertain economic environment. Political instability associated with the upcoming election will also test the resolve of the labor market.