US job openings fall marginally, consumers less upbeat on the labor market

  

U.S. job openings fell modestly in June and data for the prior month was revised higher, suggesting the labor market continued to gradually slow and was not in danger of rapidly weakening.

Consumers' perceptions of the labor market are, however, deteriorating. A survey from the Conference Board on Tuesday showed the share of consumers who viewed jobs as "hard-to-get" rising to the highest level in more than three years.

The proportion of those who believed jobs were "not so plentiful" was also the highest since March 2021. A rise in the unemployment rate over the past three months had stoked concerns about labor market weakness and the overall economic expansion.

Federal Reserve officials started a two-day policy meeting on Tuesday and are expected to leave the central bank's benchmark overnight interest rate in the 5.25%-5.50% range, where it has been since last July.

"The labor market has cooled over the last several months but isn't weak," said Nancy Vanden Houten, U.S. lead economist at Oxford Economics. "However, that's a scenario the Fed wants to guard against, and we expect the Fed to begin cutting rates in September."

Job openings, a measure of labor demand, had dropped 46,000 to 8.184 million by the last day of June, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report.

Data for May was revised higher to show 8.230 million unfilled positions instead of the previously reported 8.140 million. Economists polled by Reuters had forecast 8.0 million job openings in June.

Job openings have been steadily declining since hitting a record 12.182 million in March 2022 as demand moderates in response to the U.S. central bank's aggressive interest rate hikes. They are down by 941,000 over the year.

There were 0.9 job openings for every unemployed person in June, down from 1.1 in May. Job openings increased 120,000 in accommodation and food services, while there were an additional 94,000 unfilled positions in state and local government, excluding education.

But there were 88,000 fewer open positions in durable goods manufacturing. Vacancies decreased 62,000 in the federal government. Job openings increased among small businesses with less than 10 employees. They, however, dropped among those with 10 to 49 workers. Medium-sized and large firms reported a decline in unfilled jobs.

The job openings rate was unchanged at 4.9%.

Stocks on Wall Street were mixed. The dollar rose against a basket of currencies. U.S. Treasury prices were little changed.

JOLTS

DECLINING HIRES

A man walks past "for lease" signs on the former location of Bobby Van's Steakhouse in the financial district of New York City, U.S., October 7, 2022. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights, opens new tab

Hires declined 314,000 to 5.341 million. The largest drop in 16 months pushed the hires rate to 3.4%, the lowest level since April 2020, from 3.6% in May. Only businesses with fewer than 10 workers increased hiring.

Layoffs decreased 180,000 to 1.498 million, the lowest reading since November 2022. The labor market slowdown is being driven by reduced hiring rather than layoffs. A loosening labor market adds to subsiding inflation in building the case for a September rate cut. The Fed has hiked its policy rate by 525 basis points since March 2022 to tame inflation.

"June JOLTS estimates continue to point to a stabilization of labor demand in recent months, suggesting, for now, that the labor market is in a 'sweet spot' where demand and supply are well balanced" said Jonathan Millar, an economist at Barclays.

Hiring declined 115,000 in professional and business services and dropped 111,000 in accommodation and food services. It decreased 41,000 in construction. Layoffs were down in nearly all industries, with the exception of retail trade, where they rose 25,000. The layoffs rate dropped to 0.9% from 1.1% in May.

The number of people voluntarily quitting their jobs dropped 121,000 to 3.282 million. Quits fell 64,000 in construction.

The quits rates, viewed as a measure of labor market confidence, was unchanged at 2.1%. A steady quits rates bodes well for subsiding wage pressures and overall inflation.

The lull in resignations was best captured by the Conference Board survey, which showed the share of consumers who reported that jobs were "not so plentiful" rose to 49.9% this month, the highest level since March 2021, from 48.8% in June.

The proportion that viewed jobs as "hard-to-get" increased to 16.0%. That was also the highest reading since March 2021 and was up from 15.7 in June.

The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get narrowed to 18.1 from 19.8 in June.

This measure correlates to the unemployment rate in the Labor Department's monthly employment report. The unemployment rate rose to a 2-1/2-year high of 4.1% in June.

While consumer confidence increased this month from June's revised level, buying intentions over the next six months fell across the board. The share of consumers planning to buy a house was the lowest since February 2013.

That suggests a strong housing market rebound is unlikely even as mortgage rates have retreated after surging in spring and house price inflation is slowing.

A third report from the Federal Housing Finance Agency showed house prices increased 5.7% year-on-year in May, the smallest gain in 10 months after rising 6.5% in April.

"It will take until 2025, or even 2026, for the market to become better balanced," said Thomas Ryan, North America economist at Capital Economics.

The Senate overwhelmingly passed legislation Tuesday that is designed to protect children from dangerous online content, pushing forward with what would be the first major effort by Congress in decades to hold tech companies more accountable for the harm that they cause.

The bill, which passed 91-3, has been pushed by parents of children who died by suicide after online bullying or have otherwise been harmed by online content. It would force companies to take reasonable steps to prevent harm on online platforms frequently used by minors, requiring them to exercise “duty of care” and ensure that they generally default to the safest settings possible.

The House has not yet acted on the bill, but Speaker Mike Johnson, R-La., has said he is “committed to working to find consensus.” Supporters are hoping that the strong Senate vote will push the House to act before the end of the congressional session in January.

The legislation is about allowing children, teens and parents “to take back control of their lives online,” said Democratic Sen. Richard Blumenthal of Connecticut, who wrote the bill with Republican Sen. Marsha Blackburn of Tennessee. He said that the message to big tech companies is that “we no longer trust you to make decisions for us.”

The bill would be the first major tech regulation package to move in years, and it could potentially pave the way for other bills that would strengthen online privacy laws or set parameters for the growing use of artificial intelligence, among others. While there has long been bipartisan support for the idea that the biggest technology companies should face more government scrutiny, there has been little consensus on how it should be done. Congress passed legislation earlier this year that would force China-based social media company TikTok to sell or face a ban, but that law only targets one company.

“This is a good first step, but we have more to go,” said Senate Majority Leader Chuck Schumer, D-N.Y.

If the child safety bill becomes law, companies would be required to mitigate harm to children, including bullying and violence, the promotion of suicide, eating disorders, substance abuse, sexual exploitation and advertisements for illegal products such as narcotics, tobacco or alcohol.

To do that, social media platforms would have to provide minors with options to protect their information, disable addictive product features and opt out of personalized algorithmic recommendations. They would also be required to limit other users from communicating with children and limit features that “increase, sustain, or extend the use” of the platform — such as autoplay for videos or platform rewards.

The idea, Blumenthal and Blackburn say, is for the platforms to be “safe by design.”

“The message we are sending to big tech is that kids are not your product,” Blackburn said at a news conference as the Senate passed the bill. “Kids are not your profit source. And we are going to protect them in the virtual space.”

Several tech companies, including Microsoft, X and Snap, have supported the legislation. But NetChoice, a a tech industry group that represents X and Snap, along with Google, TikTok and Meta Platforms, called it unconstitutional.

Carl Szabo, a vice president and counsel for the group, said in a statement that the law’s “cybersecurity, censorship, and constitutional risks remain unaddressed.” He did not elaborate.

Blumenthal and Blackburn have said they worked to find a balance between forcing companies to become more responsible for what children see online while also ensuring that Congress does not go too far in regulating what individuals post — an effort to head off potential legal challenges and win over lawmakers who worry that regulation could impose on freedom of expression.

In addition to First Amendment concerns, some critics have said the legislation could harm kids who wouldn’t be able to access information on LGBTQ+ issues or reproductive rights — although the bill has been revised to address many of those criticisms, and major LGBTQ+ groups have decided to support the proposed legislation.

The bill also includes an update to child privacy laws that prohibit online companies from collecting personal information from users under 13, raising that age to 17. It would also ban targeted advertising to teenagers and allow teens or guardians to delete a minor’s personal information.

Massachusetts Sen. Ed Markey, sponsored the original legislation in 1998 — the last time Congress passed a child online safety law — and worked with Republican Sen. Bill Cassidy of Louisiana on the update. Markey said that the online space “has come a long way” since the first bill and new tools are needed for parents as teens have struggled with mental health.

As their bill stalled for several months, Blumenthal and Blackburn worked closely with the parents of children who have been harmed by social media — either by cyberbullying or social media challenges, extortion attempts, eating disorders, drug deals or other potential dangers. At an emotional news conference last week, the parents said they were pleased that the Senate is finally moving ahead with the legislation.

Maurine Molak, the mother of a 16-year-old who died by suicide after “months of relentless and threatening cyberbullying,” said she believes the bill can save lives. She urged every senator to vote for it.

“Anyone who believes that children’s well-being and safety should come before big tech’s greed ought to put their mark on this historic legislation,” Molak said.