July job growth far exceeded expectations. Job growth was expected to slow in July, falling below the average increase seen over the last several months due to the Fed's aggressive efforts to stem inflation, but this was not the case. Non-farm payroll rose by 528,000. While payroll is increasing, job openings decreased by 10.7 million, according to the June Job opening and Turnover Survey.
June's Job Opening and Turnover Survey
The number of job openings reported has fallen from 11.3 million in May to 10.7 million at the end of June, bringing the number of jobs available per unemployed person down from 1.9 to 1.8. The total number of hires (6.4 million) and separations (5.9 million) were little changed in June.
The sectors that saw the largest decrease in job openings are retail trade (-343,000), wholesale trade (-82,000), and State and Local government education (-62,000).
The transportation sector saw an increase in other separations (separations due to retirement, death, disability, or transfers to other locations) of 9,000.
Quit rates in June were little changed at 4.2 million, or 2.8%. While little changed, the number of quits did drop slightly for the second month in a row. This indicates that employees still take advantage of the worker shortage to seek new positions with greater benefits, though we see clear signs that this is starting to slow.
July Jobs Report
To say that July's jobs report exceeds expectations honestly downplays how much higher the job gains were than expected. The aggressive rate hikes to stem inflation had been expected to slow the pace of hiring in July, but this was far from the case. Instead of falling below the average of the last four months (388,000), July's payroll exceeded the average significantly.
The total non-farm payroll rose by 528,000, and the unemployment rate dropped to 5.7 million/ 3.5%. Both of these key factors have now returned to their pre-pandemic levels. July saw unemployment for women decline to 3.1%. Long-term unemployment dropped to 1.1 million, returning to its pre-pandemic levels.
While hires have climbed and unemployment dropped in July, the labor force participation rate and the employment to population rate saw little change and remain below the pre-pandemic levels.
Private sector employment is currently 629,000 higher than in February of 2020. Still, several sectors have yet to return to the pre-pandemic levels including leisure and hospitality (-7.1%), healthcare (-0.5%), government (-2.6%), local government (-3.8%), and social assistance (-1.2%).
Transportation and Warehousing gained 21,000 jobs in July and are 745,000 higher than February 2020.
Job growth far exceeded expectations and showed that increased interest rates are not, at least yet, impacting hiring. Quit rates remain even, and, while job openings have dropped, there are still 1.8 jobs available for every unemployed person. Competition for the best candidates has not slowed and ensuring that your recruitment marketing is at top gear remains important.
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Debra Watkins covers recruitment and digital marketing for Lionzone. A Nashville native, after graduating from the University of Kentucky, Debra utilized her research and writing skills in the museum and heritage tourism fields, rising to director of two institutions, before returning to Nashville in 2020 to join Lionzone.