Job market stayed hot in June despite Fed rate hikes, fewer openings

The job market may be cooling slightly off recent highs, but its temperature is still sizzling hot.

Job openings ticked down to 9.58 million in June from 9.62 million in June, down from 10.96 million in June of last year, according to data released Tuesday by the Labor Department.

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That means there are 1.6 open jobs in the U.S. economy now for each job seeker — a ratio that still favors people who are looking for work.

Openings decreased in transportation and warehousing by 78,000 and in state and local government by 29,000. They increased by 136,000 in health care and social assistance.

New hires decreased by 326,000 to 5.9 million. People leaving their jobs either because they were laid off, quit or fired decreased by 280,000 to 5.6 million.

The number of people quitting their jobs decreased to 3.8 million from 4.1 million in May for a quit rate of 2.4 percent. Quits can be a sign of how free workers are to leave their jobs, often to take up new positions with better pay or working conditions.

Biden boosted by economy

The downtick in quits and open jobs isn’t enough to remove the luster from recent surprisingly strong economic data, including a boost in second-quarter economic growth at 2.4 percent annualized.

The steady stream of strong economic data is good news for President Biden heading into the 2024 election as GOP messaging has consistently taken aim at Biden’s handling of the economy.

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“The Washington Post suggested that Republicans may have to find something else to criticize me for now that inflation is coming down,” Biden said last month. “Maybe they’ll decide to impeach me because it’s coming down. I don’t know – I love that one.”

How long can the job market defy the odds?

Higher employment is traditionally associated with higher inflation and lower employment with lower inflation, but that relationship has been called into question in recent decades and has been all but thrown out during the recovery from the pandemic.

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Consumer inflation has fallen to 3 percent annually, according to data from the Labor Department, even as the unemployment rate has remained near record lows. The jobless rate was 3.6 percent in June, according to the Labor Department.

“This business cycle was so sufficiently strange and sufficiently unusual, that I don’t think that the normal rules of a direct tradeoff between unemployment and inflation necessarily have to apply,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said in a Monday interview.

“They certainly have not applied in the last six months,” he said.

According to the Census Bureau, 80 percent of U.S. households receive no income from interest payments, dividends or rental income, implying that money earned in the form of wages from employment is a primary source of income. 

Only about 19 percent of households make money from interest, dividends or rent, according to the Census.