U.S. JOLTS: Labor Market Gradually Loosens Along With Decline

<p>&nbsp;Demand for labor continues to show signs of easing, with jobs offered in the United States (US) falling to 9.58 million in June.</p><p><br /></p><p>This figure is slightly below the two-year low recorded in May and a 20% decline from the peak recorded in March 2022.</p><p><br /></p><p>Despite showing a downward trend, the number of jobs offered is still high compared to other labor demand metrics such as job ads on Indeed and the small business hiring plan (NFHB), and both have returned to pre-pandemic levels.</p><p><br /></p><p>However, the gradual decline in the number of jobs offered suggests that the labor market is slowly stabilizing.</p><p><br /></p><p>The ratio of the number of unemployed individuals per job offer, based on data compiled by Federal Reserve officials, rose slightly to 1.61 but was still well below the cyclical peak of 2.01.</p><p><br /></p><p>The decline in job offers can be attributed to several factors:</p><p><br /></p><p>Almost finished the effort to add jobs again,</p><p>weak growth prospects, and</p><p>the solution of worker dependence in the labor market after the chaos caused by the pandemic.</p><p>Hiring, which represents the number of workers hired in June, decreased to 5.9 million, the lowest level since the start of 2021, and similar to the rate observed in 2019.</p><p><br /></p><p><br /></p><p>At the same time, the number of workers who quit also decreased, mainly due to a decrease in voluntary employment. The quit rate is back to 2.4%, slightly above pre-pandemic levels.</p><p><br /></p><p>Fewer workers who quit result in fewer jobs being offered and less wage pressure due to better job retention.</p><p><br /></p><p>On the other hand, job losses, especially layoffs, declined for the third consecutive month, in line with the recent flat trend in initial unemployment insurance claims.</p><p><br /></p><p>This shows that while the demand for new workers is declining, the demand for existing workers remains constant.</p><p><br /></p><p>The latest Job Survey and Job Turnover (JOLTS) report reinforces the view that the Federal Reserve can manage inflation without causing significant disruptions in the labor market.</p><p><br /></p><p>A reduction in job losses is helping to ease wage pressures, while historically low layoffs and a decline in job offers since March 2022 point to a slowdown in labor demand.</p><p><br /></p><p>However, this continued decline in demand may present challenges to effectively maintaining current disability trends, unless the supply of workers weakens.</p><p><br /></p><p>In addition, the achievement of recovery to the 2% inflation level has not yet been achieved, indicating that the "SOFT LANDING" statement is still too early in our view.</p>