Labor Market Extends Its Record-Setting Heat Streak

The labor market conditions Fed Chair Jerome Powell has described as “extremely, historically” tight and “unsustainably hot” persisted in May, according to the  May JOLTS report released today by the U.S. Bureau of Labor Statistics.

We have now had 6 straight months of more than 11 million job openings and 12 straight months of more than 4 million people voluntarily quitting their jobs—a sign of high job seeker confidence signaling continued upward pressure on wages and likely future increases in labor force participation.

There were 11.3 million job openings—61% more than before Covid, and almost twice as many as the number of unemployed job seekers. And 4.3 million workers quit their jobs. Those numbers are near their all-time record highs.

Meanwhile, layoffs and discharges remained historically low at 1.4 million, well below the pre-Covid average of 1.9 million—an indication that employers are hanging onto the workers they have in a tight labor market where replacing them is unusually costly. Job openings/quits figures from the April report were revised upwards.

Here are the key takeaways from the report:

  • Small business demand for workers remains intense, with job openings reaching an all-time record high.
    • At 1.8 million, job openings are at a record high in small businesses with fewer than 10 employees. According to NFIB’s small business jobs report, labor shortages continue to be a challenge with 51% of small businesses reporting job openings they could not fill in May, near the 48-year record high set in September. 92% of those owners hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Overall, two in three small businesses reported hiring or trying to hire in May, up eight points from April. So small business demand for labor is showing no signs of cooling.
  • There is no evidence of mass layoffs in tech, but labor market conditions in the tech sector do appear to be cooling slightly.  
    • The job openings rate in the information sector slowed in May to 7.4% from 8.4% in April, and the hires rate declined slightly to 3.4% from 3.5%. The layoff rate has been picking up for the last 3 months (0.8% in March, 0.9% in April, 1.0% in May), however it is still lower than the 2021 average of 1.1%.
  • The rapid increase in mortgage rates is dampening worker confidence in real estate and financial services. 
    • Quits fell 41% in real estate and rental and leasing—a sign that workers in that industry are no longer confident that they’ll be able to find a new job if they leave their current positions. Market conditions have cooled very quickly, with large declines in home purchases and mortgage applications, as mortgage rates have risen faster than ever before. Layoffs also spiked 71% in finance and insurance as some firms in the industry cut costs.
 

Written by

Julia Pollak is Chief Economist at ZipRecruiter. She leads ZipRecruiter's economic research team, which provides insights and analysis on current labor market trends and the future of work.

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