By Myles Udland, reporter and co-anchor of The Final Round.
The U.S. labor market continues to rebound from a washout in the spring. But the road back to anything resembling pre-COVID 19 levels still appears quite long. Job openings were up in July, layoffs were steady, but hiring slowed.
Job openings at the end of July stood just north of 6.6 million, a solid improvement from the 6 million jobs open at the end of June and up significantly from the 4.9 million jobs that were open at the end of April, the labor market’s nadir. July’s openings, however, were down sharply from 7.3 million a year ago.
Layoffs totaled 5 million in July. In March and April, layoffs totaled 14.6 million and 9.9 million, respectively. Another relative bright spot in the report was the number of unemployed workers per open job. The raw data that takes those unemployed divided by jobs open shows there were 2.5 workers for each open job. Before the pandemic, there was fewer than 1 worker looking for a job for each job available.
But Indeed economist Nick Bunker notes that if you take out those temporarily unemployed from this number, there are closer to 1.4 jobs open for each unemployed worker. This offers a slightly more positive outlook for those who have been permanently laid off and are looking for work.
Another increase in job openings is a heartening sign for workers who have permanently lost their jobs. While the outlook for workers looking for a new job is far worse than earlier this year, their prospects might not be as grim as the headline numbers would indicate. Still, this situation could deteriorate significantly if the economic damage from the coronavirus lasts. If the vast majority of workers temporarily laid off can return to their former jobs, the outlook for people permanently out of work may not be as dire as some think. But that assumption might be a big one.
And while rising job openings indicate that more businesses are re-opening, resuming previous expansion plans, or setting up shop for the first time at a higher rate, the pace of hirings in July also slowed down as the snapback seen in May and June tapered off. Some 5.8 million hires were made in July, down from 6.9 million in June and 7.2 million in May. In July 2019, there were 5.9 million hires made. Another 1 million non-farm payrolls were added back to the economy (excluding hiring related to the Census), though overall employment remains 11.5 million jobs below February. Damage in the service-sector specifically where employment levels are about 9% below pre-COVID levels are particularly troubling given the sector accounts for about 80% of overall employment.
The Federal Reserve’s latest Beige Book published last week also painted a mixed picture for the labor market with manufacturing employment looking strong while the service sector revealed, “rising instances of furloughed workers being laid off permanently as demand remained soft.”
Additionally, data published by Indeed on job openings released Wednesday — a data set the Morning Brief has previously covered — show a bifurcated labor market recovery, similar to what was suggested by the latest jobs report. Indeed’s report showed that in construction, for instance, job postings are actually up 7.7% against last year. Hospitality & tourism related job postings, however, are down 46% from last year.
And while this is certainly an intuitive finding given the boom we’ve seen in housing and the challenges of traveling right now, this data serves as a reminder that while the recovery is chugging along the benefits are not evenly spread and overall output is still depressed by almost any measure. “It remains difficult to understand why various measures related to layoffs have sent different signals in recent months, but several of the key measures suggest that we have moved past the worst of the layoffs associated with the virus spread,” said Daniel Silver, an economist at JPMorgan.
But moving past the worst of a historically deep contraction in the labor market and economic growth will require a more robust and sustained rebound than a mere steadying of the labor market and overall activity.