This is not what a recession looks like. The May 2022 Job Openings and Labor Turnover Survey (JOLTS) data obviously lags what’s happening in the labor market presently, but all signs are that it remains strong. Demand is still very elevated, with 11.3 million job openings at the end of May. Workers are still quitting their jobs at elevated rates and layoffs are still very low. Clouds can move in quickly and darken the outlook for the US labor market, but for now, the sun is still shining.
If the labor market were quickly and suddenly taking a downturn, we would see employers’ demand for new hires drop and their willingness to let workers go increase. For now, we aren’t seeing a sudden move in either direction. Yes, job openings have drifted down slightly in recent months, but there are still 1.9 job openings for every unemployed worker.
Workers are taking advantage of those opportunities. The quits rate in the private sector is still above 3%, continuing to well exceed its 2019 average of 2.6%. Both of these metrics have eased in 2022, but a slow drift down is very different from a dramatic pullback that would indicate a downturn.
Despite continued headlines about layoffs, particularly in the tech sector, the layoff rate remains low at 0.9%. This is the 15th straight month that the layoff rate has been below its pre-pandemic bottom. Information, the industry sector containing technology companies, saw its layoffs rate rise to 1% from 0.9%. Not a very concerning sign there.
There will be a time when the US labor market takes a downturn, jobs are shed at a higher rate, and workers stop quitting their jobs. But that time has yet to come. The labor market remains very tight and very hot. That may change, but it hasn’t yet.