Job market gains momentum in July despite recession signals elsewhere

The U.S. economy had about 11.2 million open jobs in July, a slight increase from June. It is the latest sign of strength in a historically strong labor market.

Since May 2021, there have been almost two open jobs for every person seeking work.

“It’s still one of the best job markets that I’ve ever seen, and I’ve been doing this for 16 years,” said Jason Wachtel, the co-founder of job placement firm JW Michaels & Co.

Some areas, like manufacturing and health care, saw increased available jobs compared to June.

But July’s data reflected a cool down in other areas. There were fewer open jobs in construction, finance and the leisure and hospitality sector.

And there are signs that job-hopping has slowed down.

July’s “quits rate,” which measures how many people leave their jobs each month, was 3.9%.

While that’s higher than historical levels, it is one of the lowest rates recorded in the last 18 months.

Wachtel said some people who recently switched jobs may choose to stay put.

“Because when people see people moving jobs constantly,” Wachtel said, “and it’s just about compensation, red flags do go up.”

The lower quits rate could also reflect businesses’ desire to hang on to their workers.

Some businesses “changed their tactics during the pandemic and stopped reaching out to employees on the weekends, or stopped reaching out to them at 9 o’clock at night unless it’s an emergency,” said Wachtel. “Those employers have done a really great job of eliminating or limiting the amount of people that leave.”

Many analysts wonder how long the job market can remain strong. The Federal Reserve has said it will continue to raise interest rates in an effort to lower inflation.

Higher interest rates, historically, have led to layoffs and a weaker job market.

Wachtel said the current market is bucking the trend.

“We haven’t heard one candidate say, ‘Is it still a good market?'” Wachtel said. “They know it’s a good market. They’re getting called by a million recruiters. They’re getting called by companies.”

“I’m assuming there’s gonna be some impact on hiring based on interest rates being raised,” Wachtel said. “But where we are right now, even if it comes down ten percent, it’s still an unbelievable job market for employees.”