In an unexpected turn, U.S. job openings experienced a rise in May, signaling that the labor market in the country shows resilience even amidst the challenges posed by elevated borrowing costs and the uncertain economic policies.
The Labor Department revealed that job vacancies increased to 7.8 million in May, a rise from the 7.4 million recorded in April, becoming the highest since November’s 8 million. This data came as a surprise to economists who had predicted a slight downturn to 7.3 million. The increase in job openings was most notable in sectors such as hospitality and finance, while federal government vacancies fell to their lowest since May 2020, which may be linked to the hiring freeze initiated during President Donald Trump’s administration.
The Job Openings and Labor Turnover Survey (JOLTS) from the Labor Department underscored a modest increase in the number of Americans leaving their jobs voluntarily, indicating growing confidence in job seekers about their employment prospects. Additionally, there was a noted decline in layoffs.
However, despite the availability of jobs, hiring activities saw a reduction in May. This suggests a cautious approach from employers, who remain hesitant in expanding their workforce in light of ongoing economic uncertainties, despite wanting to retain their current staff. Nancy Vanden Houten, the lead U.S. economist at Oxford Economics, commented, “Hiring remains depressed, but that is less worrisome than it would be otherwise because layoffs continue to be low.”
While job openings remain historically elevated, they have significantly decreased from the record high of 12.1 million seen in March 2022. The U.S. labor market has been gradually slowing down from the hiring surge experienced between 2021 and 2023 following the economic rebound post-COVID-19 lockdowns. This post-pandemic recovery unexpectedly spurred inflation, prompting the Federal Reserve to increase its benchmark interest rates eleven times across 2022 and 2023.
The increase in interest rates has been gradually tempering the labor market’s vigor. Additional uncertainty has been injected into the hiring forecast by President Donald Trump’s import taxation policies.
Looking ahead, the Labor Department is anticipated to report that the U.S. economy generated 117,000 new jobs last month. Although this figure represents a drop from May’s 139,000 new jobs, it also marks a decrease from the average of 168,000 jobs per month expected in 2024 and the monthly average of 400,000 during the 2021-2023 hiring boom. The unemployment rate is projected to experience a slight increase to 4.3%, up from May’s 4.2%, yet it remains relatively low.