By Lucia Mutikani
WASHINGTON, June 30 (Reuters) – U.S. job openings edged up to a two-year high in May, but subdued hiring soured consumers’ perceptions of the labor market, with the share viewing employment as “hard to get” surging to nearly a 5-1/2-year high in June.
Economists said the mixed reports on Tuesday suggested the labor market remained stable, despite strong gains in recent months. They said there was no indication that the U.S.-Israeli war with Iran had materially impacted the labor market, and many viewed downside risks from the conflict as greatly diminished by a fragile ceasefire, which would allow the Federal Reserve more scope to focus on fighting inflation.
There were 1.04 jobs for every unemployed person in May, little changed from April, but up from 1.01 a year ago.
“The labor market continues to show signs of stabilization,” said Matthew Martin, a senior U.S. economist at Oxford Economics. “For Fed officials, this means their attention will stay focused on the inflation mandate and ensuring price stability.”
Job openings, a measure of labor demand, had increased 9,000 to 7.594 million by the last day of May, the highest level since May 2024, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report. Economists polled by Reuters had forecast 7.30 million vacancies in May. But some economists said the JOLTS report should be treated with caution, noting the response rate to the survey was very low.
“Only 24% of businesses asked by the BLS to participate in the survey now agree to do so, down from 35% just two years ago and about 70% in the late 2010s,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “And the proportion of businesses in the sample responding has declined to just 35%, from 65% in the 2010s. The potential for non-response bias, therefore, has increased substantially.”
Nearly all the job openings last month were at businesses with 10 to 249 employees. There were 132,000 fewer vacancies at establishments with fewer than 10 employees. The wholesale trade industry had an additional 71,000 unfilled jobs, while leisure and hospitality vacancies increased by 95,000, with most of the openings at restaurants and bars. There were also more job postings in construction and manufacturing sectors.
But job openings dropped by 115,000 in the healthcare and social assistance industry, one of the main pillars of job growth. There were 69,000 fewer vacancies in the finance and insurance industry while unfilled positions declined by 43,000 in the transportation, warehousing and utilities sector.
The job openings rate was unchanged at 4.6%. Hiring fell by 45,000 to 5.170 million last month, but the rate held steady at 3.3%. The second straight monthly decline was led by a drop of 40,000 in the transportation, warehousing and utilities industry.
There were notable decreases in hiring in construction and wholesale trade. The decline in overall hiring in May was at odds with a strong increase in nonfarm payrolls, which extended the streak of solid job gains to three months.
POSSIBLE DOWNWARD REVISIONS TO MAY PAYROLLS
“We were surprised to see the total hiring rate unchanged and the private hiring rate decline again in May despite stronger May job growth,” said Veronica Clark, an economist at Citigroup. “This could mean possible revisions lower to May data or weaker net job growth could reflect actions taken in the second half of May. This would suggest softer June employment.”
The closely watched U.S. employment report for June, due on Thursday, is projected to show a gain of 110,000 jobs last month after an increase of 172,000 in May, according to a Reuters survey of economists. The unemployment rate is forecast to hold steady at 4.3% for a fourth straight month.
There is, however, a risk that the unemployment rate could rise, as consumers’ perceptions of the labor market deteriorated in June. A survey from the Conference Board on Tuesday showed the share of consumers who viewed jobs as “hard to get” jumped to 22.5% this month, the highest level since January 2021, from 19.8% in May. The proportion saying jobs were “plentiful” was little changed at 24.9%.
The survey’s so-called labor market differential narrowed to 2.4 from 5 in May. This measure closely correlates to the unemployment rate in the Labor Department’s employment report.
“Consumers anticipate little change in the labor market six months from now,” said Dana Peterson, chief economist at the Conference Board.
Overall consumer confidence ticked higher as the shaky truce between the U.S. and Iran drove down oil prices, offering households relief at the pump. Financial markets expect the Fed to raise interest rates this year to fight inflation stoked by the war.
The U.S. central bank this month left its benchmark overnight interest rate in the 3.50%-3.75% range, but updated quarterly projections showed policymakers expected to raise borrowing costs this year.
Stocks on Wall Street rose on Tuesday. The dollar gained versus a basket of currencies. U.S. Treasury yields were higher.
Though the JOLTS report showed layoffs increased by 41,000 to 1.708 million in May, they were low by historical standards. There were notable increases in layoffs in the construction, retail, and healthcare and social assistance industries. But layoffs fell in the arts, entertainment and recreation sector as well as the professional and business services industry.
The layoffs rate edged up to 1.1% from 1.0% in April. Fewer people are quitting their jobs, with resignations rising by only 22,000 to 3.065 million. The quits rate, viewed by policymakers as a gauge of labor market confidence, was unchanged at 1.9%. The data also suggested wage inflation was not a threat.
“Workers tend to quit jobs when they believe something better is within reach, and right now the data indicate that many clearly don’t,” said Sneha Puri, an economist at Indeed Hiring Lab.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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