July 7, 2021 Reading Time: 3 minutes

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the total number of job openings in the economy rose to 9.209 million in May, up from 9.139 million in April. The number of open positions in the private sector increased to 8.305 million in May, up from 8.263 million in April. Both measures are at new highs (see first chart).

The total job openings rate, openings divided by the sum of jobs plus openings, held at a record 6.0 percent in May while the private-sector job-openings rate remained at a record 6.3 percent (see first chart).

Four industry categories have more than 1.4 million openings each: education and health care (1.646 million), trade, transportation, and utilities (1.638 million), professional and business services (1.491 million), and leisure and hospitality (1.415 million; see second chart).

The highest openings rates were in leisure and hospitality (9.0 percent), professional and business services (6.7 percent), education and health care (6.5 percent), manufacturing (6.2 percent), and trade, transportation, and utilities (5.7 percent; see third chart).

The rise in private job openings was a function of hires, separations and changing labor requirements. Private hires in May totaled 5.619 million versus 5.661 million in April. At the same time, the number of private-sector separations fell to 5.035 million in May, down from April’s 5.478 million. Within separations, private quits were 3.438 million (versus 3.810 million in April) and layoffs were 1.299 million, down from 1.365 million in the prior month.

The total separations rate fell to 3.7 percent from 4.0 percent in the prior month with the private sector experiencing a rate of 4.1 percent, off 0.4 percentage points from 4.5 percent in April.

From the worker perspective, labor market conditions remained tight in May. The number of openings per job seeker (unemployed plus those not in the labor force but who want a job) fell slightly to 0.596 in May, down from 0.605 in April, but well above the April 2020 low of 0.156. This measure has risen sharply over the last few months and is now closing in on the record high of 0.721 in October 2019 (see fourth chart).

Overall, the data relating to the labor market continue to suggest a tight, robust labor market including June’s jobs report which showed a net increase of 850,000 payroll jobs, and the continued decline in the number of weekly initial claims for unemployment benefits. The conclusions are confirmed by private-sector business surveys which show businesses struggling to find and retain qualified workers.

However, at the same time, the unemployment rate is still elevated at 5.9 percent (versus 3.5 percent before the pandemic) while the broader underemployment rate (U-6 rate) was 9.8 percent for June (versus 6.8 percent in December 2019). Part of the discrepancy is related to the participation rate (employed plus unemployed looking for work as a percentage of the labor force) which was 61.6 percent for June, well below the 63.4 percent prior to the pandemic. The labor force has shrunk by about 3.5 million people since January 2020.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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