The number of available jobs in the US is decreasing

(CNN) — Jobs are slowly disappearing in the U.S., and hiring has slowed to its slowest pace in a decade (excluding the pandemic), causing more workers to hold on to the jobs they already have.

The good news: it doesn’t look like those jobs are at risk.

That’s according to the latest Job Openings and Labor Turnover Survey from the U.S. Bureau of Labor Statistics. The survey found that the number of job openings fell slightly in June, hiring activity slowed, layoffs were few and the number of people leaving their jobs hit a three-year low, data released Tuesday showed.

It’s yet another sign that the once red-hot labor market is not only becoming more stable, but may even be heading for a downturn.

“Even as (Tuesday’s) data show the labor market is cooling at a manageable pace, warning signs remain,” Wells Fargo economists Sarah House and Aubrey George wrote in a note to clients Tuesday. “Demand for labor remains concentrated in just a few sectors, workers are holding back and feeling less confident about job availability, and companies are more reluctant to hire new workers.”

What the latest data shows

Employers posted an estimated 8.18 million jobs in June. While that was higher than economists had expected, it was a small step down from the upwardly revised count of 8.23 ​​million job openings in May, according to the JOLTS report.

It’s also the second-lowest monthly total seen so far this year. What’s more, the ratio of open positions to job seekers is 1.24, slightly higher than the 2019 average, according to BLS data.

Economists expected the number of job openings to shrink to 8 million, according to FactSet consensus estimates.

Last month’s hiring was among the weakest in years, with an estimated 5.34 million new hires and the hiring rate (number of hires as a share of employment) the lowest since April 2020, when the labor market collapsed at the start of the pandemic. Outside of the pandemic, the hiring rate has not been this low since February 2014, BLS data show.

‘A dramatic delay’

“Clearly, we’ve seen a significant slowdown in hiring, and that’s coupled with a slow layoff rate,” Daniel Zhao, chief economist at employment review and online job site Glassdoor, told CNN. “And I think the slow hiring and layoffs together point to a labor market that lacks healthy turnover.”

“Employers are not recruiting as aggressively, meaning employees are not looking for the next opportunities to advance their careers and instead are waiting and prioritizing job security,” he added.

In addition to headline job openings, economists also keep a close eye on the quits rate, or the number of people who voluntarily leave their jobs as a percentage of total employment. That metric serves as a signal of workers’ willingness to explore the labor market.

In June, that percentage was still 2.1%, the lowest level since June 2020. However, the estimated number of terminations fell from 3.403 million to 3.282 million, reaching the lowest monthly total since November 2020.

One bright spot for workers and the overall health of the labor market: Layoffs fell to an estimated 1.498 million in June, the lowest number since November 2022. While weekly jobless claims are slowly rising, the total number of layoffs is well below pre-pandemic levels, Zhao said.

Cautious employers wait for a catalyst

“When I look at the hard economic data on layoffs, I don’t think the current situation is a red flag; but it’s clear that employees are still very concerned about it,” said Zhao, who noted that the most recent Glassdoor survey showed sluggish confidence among employees.

The low number of layoffs, he added, indicates that employers are probably just being cautious and that there is some demand to start hiring again.

“The signal we’re getting now is more about caution than about a more serious deterioration in economic conditions,” he said. “That can’t last forever, right? So I think we’re waiting for a catalyst in either direction.”

The most likely catalyst? When the Federal Reserve finally pulls the trigger on a rate-cutting cycle.

After launching one of the most aggressive monetary tightening campaigns in March 2022, the US central bank has kept interest rates at their highest level in 23 years over the past 12 months, expecting a sustained slowdown in inflation.

That has certainly happened in recent months. Yet Fed officials are apparently more concerned with the stability of the labor market, which has cooled and seen a steady rise in the unemployment rate.

The Fed will announce its final rate decision on Wednesday, widely expected to be another pause. Markets are predicting the first rate cut will come in September.

“I don’t think (a September rate cut) would be too late, but I understand why the Fed would have to cut rates earlier,” Zhao said. “The problem with this is always that monetary policy operates on long and variable lags; so we’ve already seen a significant slowdown in the housing market, and if there is a rate cut in September, the question is how long does it take for that to trickle down to the labor market?”