US job openings were much higher than expected in May, shrugging off uncertainty from Iran war

By Alicia Wallace, CNN

(CNN) — Good news for job seekers: The number of available positions in the United States increased for the second month in a row.

New data Tuesday showed that the estimated number of job openings ticked higher in May to nearly 7.6 million, from 7.59 million, setting a fresh two-year high in the process, according to the Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey.

Economists had expected the number of job openings to drop nearly 10% in May to around 6.975 million and that the jump in openings in April was likely an overstatement of labor demand.

That doesn’t appear to be the case. Tuesday’s report could provide further evidence that the US labor market is not only stabilizing but also is poised for expansion.

“The hiring recession is over, and we are starting to see more industries look for workers again, and that’s really good news,” Heather Long, chief economist at Navy Federal Credit Union, told CNN in an interview Tuesday.

Job openings increased across a variety of industries in May, including leisure and hospitality and wholesale trade as well as construction and manufacturing. Job postings shrank in industries such as healthcare, finance and tech, Tuesday’s report showed.

“It’s a bit of a winners and losers story,” Long said. “Some industries, particularly the blue-collar sectors, appear to be rebounding, while some others – obviously tech and finance – continue to be weak.”

Technology and finance employment has been particularly squeezed by the rise in adoption of artificial intelligence technologies.

The US labor market has been stuck in a “low-hire, low-fire” rut for much of the past two years. After the post-pandemic boom, job growth started to normalize but slowed further due to a combination of factors (among them a shrinking labor force as well as high uncertainty around major shifts in federal policy).

More jobs are available, but employers are still cautious

“Now it seems that there’s a correction to the correction – that companies are realizing AI can’t do it all, that they still need workers, and they’re realizing that demand is strong enough to merit more hiring,” Long said. “It’s still cautious … there’s definitely a cautious expansion in hiring.”

Tuesday’s report showed just that. Despite businesses’ increased appetite to expand their workforces, not all are pulling the trigger: The number of new hires dropped for the third month in a row.

Hiring remaining subdued while job openings and total employment rise is “not a contradiction,” noted Sneha Puri, economist at Indeed.

“It just means recent employment gains are being driven more by a historic drop in separations than by new hiring activity. Fewer people are losing or leaving their jobs, but not many more people are getting them.”

Part of that is likely because there are fewer workers in the labor pool, said Noah Yosif, chief economist at the American Staffing Association.

“The stall in job openings is being offset by a smaller labor supply, due to a smaller working-age population,” he wrote in a note on Tuesday.

At the same time, May’s JOLTS data didn’t show a significant shift in layoffs or the number of people voluntarily quitting their jobs (an indicator that workers aren’t yet confident enough in the labor market to jump ship).

A separate report released Tuesday showed that Americans remain fairly pessimistic about the labor market.

The Conference Board’s latest Consumer Confidence Index edged higher in June thanks to lower gas prices, but “perceptions of the current labor market softened measurably as the percentage of consumers saying jobs were ‘hard to get’ rose to 22.5%, the highest level since January 2021,” Dana Peterson, the Conference Board’s chief economist, said in a release.

She added that respondents anticipate “little change” in the labor market in the next six months.

The US job market appears to have turned a corner in recent months. The economy added an estimated 172,000 jobs in May, which marked the third consecutive month of 100,000 more jobs added. The unemployment rate has held steady at 4.3%.

Economists are expecting another decent month of employment growth in June.

The latest jobs report, which is due out Thursday because of the July 4th holiday, is expected to show that the economy added about 100,000 jobs last month while the unemployment rate remained unchanged.

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CNN’s Bryan Mena contributed reporting.