Job openings fall by half a million

There were about half a million fewer job openings in May than the previous month, providing at least a modest sign that the ultra-tight labor market could be loosening a bit, the Labor Department reported Thursday.

The closely watched Job Openings and Labor Turnover Survey showed that listings fell to 9.82 million, down 496,000 from April and below the 9.9 million consensus estimate from FactSet. Openings outnumbered the available labor pool by 1.6 to 1 for the month, a level that had been closer to 2 to 1 just a few months ago.

The decline would have been even more had there not been an increase of some 61,000 in government-related positions. Openings tumbled in health care and social assistance (-285,000) as well as finance and insurance (-139,000).

The report comes amid conflicting signs of where the labor market is heading.

Earlier Thursday, payroll services firm ADP reported a stunning 497,000 new private sector jobs in June, more than double the 220,000 Dow Jones estimate.

That report raised fears that the Federal Reserve would have to stay tough on inflation and continue to push up interest rates.

In a speech Thursday morning, Dallas Fed President Lorie Logan said she is concerned that inflation is not coming down rapidly enough and that more restrictive monetary policy will be necessary, particularly to address labor market imbalances.

“Job openings remain far above the 2019 level. Layoffs remain low. There is no indication of an abrupt deterioration in labor market conditions,” Logan said in remarks delivered at Columbia University in New York.

“The continuing outlook for above-target inflation and a stronger-than-expected labor market calls for more restrictive monetary policy,” she added.

The JOLTS report showed a rise in the quits level, often an indication of a tight labor market where workers feel confident they can leave their current jobs for better opportunities. Quits increased by 250,000, taking the rate up to 2.6%, a 0.2 percentage point increase.

Hires rose slightly while layoffs and discharges nudged lower.

In a separate report Thursday morning, the ISM services index for June posted an unexpected increase to 53.9, representing the share of businesses that reported expansion. That was up from 50.3 in May and above the 51.3 estimate. A reading above 50 indicates expansion.

The employment index rose back into expansion, climbing 3.9 points to 53.1. However, the prices index fell back 2.1 points to 54.1. Business activity and production jumped to 59.2, an increase of 7.7 points.