The number of job openings in the U.S. rose slightly to 8.1 million in May, despite the impact of rising interest rates.
by
By Paul Weissman AP Economics Reporter
July 2, 2024, 10:13 AM
• 3 min read
WASHINGTON — U.S. job openings rose slightly in May to 8.1 million, despite interest rate hikes aimed at cooling the labor market.
The Labor Department said Tuesday that job openings rose from a revised 7.9 million in April, dropping below 8 million for the first time since February 2021. April job openings were down from the 8.1 million initially reported.
The number of people laid off rose to 1.65 million in May from 1.54 million in April. The number of people quitting jobs — a sign of confidence in future prospects — was essentially unchanged.
“This report is another sign that the labor market is strengthening. The economic expansion looks strong,” said Robert Frick, an economist at Navy Federal Credit Union.
The U.S. economy and job market have proven surprisingly resilient despite the Federal Reserve's policy of raising interest rates to tame inflation, which has raised interest rates 11 times in 2022 and 2023, bringing them to their highest levels in 23 years.
Contrary to expectations of a recession, the U.S. economy continued to grow and employers continued to hire.
But there have been recent signs the economy is losing steam: job openings have been declining steadily since peaking at 12.2 million in March 2022. The job market remains strong: There are 1.25 job openings for every unemployed American, down from a 2-to-1 ratio in January 2023.
Federal Reserve policymakers have welcomed the decline in job openings as a relatively painless way to cool a red-hot job market and ease pressure on companies to raise wages, which could fuel inflation.
The economy grew at an annualized rate of just 1.4% in the first three months of this year, the slowest pace since spring 2022. Consumer spending, which accounts for about 70% of U.S. economic activity, grew just 1.5% in each of the final two quarters of 2023 after growing at a pace of more than 3%.
The Labor Department is due to report Friday that employers added 190,000 jobs last month, down from 272,000 in May, according to a survey of forecasts by data firm FactSet. The unemployment rate is expected to remain low at 4 percent.
Higher interest rates have helped push inflation closer to the Fed's annual target of 2% from a 40-year high of 9.1% in June 2022. Progress in containing price increases would allow the central bank to start cutting interest rates, and Wall Street investors expect the first cuts to come when the Fed meets in September.
Federal Reserve Chairman Jerome Powell said on Tuesday at a conference in Portugal that progress toward lower inflation appears to have resumed after stalling earlier this year, but the central bank needs to see more evidence before cutting interest rates.
___
AP Business Writer Matt Ott contributed to this report.