Economist says JOLTS report shows signs of labor market ‘normalisation’

Job openings and layoffs fell slightly for the next month in a row in July, according to government data released on Tuesday. Economists say this slowdown is a sign that the labor market is returning to pre-pandemic patterns.

The number of job vacancies decreased to 8.8 million in July, from 9.58 million in June, the US Bureau of Labor Statistics reported in its monthly report. Job opportunities and labor turnover survey. The number of quits also decreased by 3.5 million, while the number of layoffs and layoffs decreased slightly by 1.6 million.

Elise Gould, chief economist at the Economic Policy Institute, said that while the drop in employment was significant, the drop was due to less labor turnover. She said the high number of job openings observed in the past few years does not necessarily indicate an overheated job market, but rather a higher rate of “change” with people quitting and new jobs being found at a faster rate.

However, as this disruption decreases, the number of vacancies will also decrease.

“It’s not necessarily shrinking,” she said of the labor market. “It’s more or less normalizing.”

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JOLTS data showed that the number of quits increased by 18,000 for state and local education.

However, it is usual to see more quits around this time. Jose Fernandez, an economist and associate professor at the University of Louisville, said July 1 is the time the fiscal year typically begins for state and local governments, so contracts change around that date.

Gold said that although education is also very cyclical, the data has yet to show whether this jump in smoking cessation is a seasonal effect or a long-term trend.

Meanwhile, the number of quits fell in lodging and catering services (down 166,000) and arts, leisure and entertainment (down 17,000).

Positions in these lower-paying sectors tend to have the highest turnover, Gould said, because workers can lose their jobs more easily. Quit rates falling in these sectors show that workers may not see other opportunities to pursue.

“Wages haven’t gone up at the same rate in those lower-paying occupations as they did earlier in the pandemic,” Gould said.

She added that the workers remained in their places.

The job market has shown consecutive declines in the past few months. Here are some indicators economists are watching ahead of Friday’s jobs report.

The black unemployment rate serves as an indicator of signs of trouble, Gould said, because recessions often hit historically disadvantaged groups first.

It will also be important to see job growth for early age workers continue to rise and nominal wage growth continue to slow. The Fed pays attention to wage growth in order to make policy decisions on interest rates.

“We’ve had a soft landing in one way or another thus far, and the labor market has been incredibly resilient to the Fed’s action against raising interest rates so quickly and so high, and I hope we’ll continue to see that,” Gold said.

“But I also hope we get the labor market to feel the full effects of the interest rate hikes we’ve already taken before we raise them again,” she added.