US private payrolls rise by 330,000 in July – less than half what economists expected

Hiring fair Florida coronavirus
A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • US private-sector businesses added 330,000 jobs in July, ADP said in its monthly hiring report.
  • The print fell well short of the 683,000-payrolls forecast but still marked a seventh straight gain.
  • More states began cutting enhanced unemployment benefits in July to push more Americans into the workforce.
  • See more stories on Insider’s business page.

The US private sector added much fewer jobs than expected last month as several states began ending enhanced unemployment benefits and COVID cases crept higher, driven by the surging Delta variant.

Private payrolls rose by 330,000 in July, ADP said in its monthly employment report. That compares to a median estimate of 683,000 jobs from economists surveyed by Bloomberg. The print marks a seventh straight month of payroll gains but a sharp slowdown from the previous month’s gains.

The initial June count was revised to 680,000 from 692,000.

The July report is the first to reflect job gains in states that began cutting the federal boost to unemployment insurance ahead of the planned September expiration. Twenty-six states – all but one led by Republican governors – have slashed the benefit early in hopes of driving more unemployed Americans into the workforce.

Insider calculations of UI claims data suggest the early cancellation has been effective at pushing people off of unemployment – but this ADP report indicates that’s not necessarily translating into faster growth in actual jobs.

Filings for unemployment insurance hovered above pandemic-era lows throughout July and ended the month at 400,000, or roughly double the pre-crisis average, and Insider has reported they may never approach their pre-pandemic norm again. Continuing claims, which count Americans receiving unemployment benefits, also wavered after months of steady decline.

And while much of the country’s economy stayed open through July, a sharp rise in COVID cases likely dragged on some hiring plans. Daily case counts began to tick higher at the beginning of the month. By the end of July, the more transmissible Delta variant drove case counts to their highest levels since February.

“When we see increases in case counts, even when it’s from lower levels, there’s that uncertainty that waves a long shadow over the labor market,” Nela Richardson, chief economist at ADP, told reporters on Wednesday. “The overall takeaway is that the recovery is happening, but its path is something we’ve never seen before.”

She continued: “We might see some stronger months and some weaker months as we proceed towards a full recovery.”

July’s biggest employers

The leisure and hospitality sector added the most jobs throughout last month, with a gain of 139,000 jobs. The education and health services sector followed with a 64,000-payroll gain. Both sectors were some of the hardest hit by the pandemic and counted for the bulk of job gains since reopening began in the spring.

Conversely, the information sector shed 1,000 jobs through July. Hiring was nearly flat in the construction and natural resources and mining sectors.

Businesses with between 50 and 499 employees hired the most, posting a 132,000-payroll gain. Firms with more than 500 employees added 107,000 jobs, and companies with fewer than 50 workers gained 91,000 payrolls, according to ADP.

Supply chain pressures continued to weigh on goods-producing industries, particularly in manufacturing and mining, Richardson said.

Labor shortages also dragged on gains in both goods and services sectors, according to ADP. Unemployed workers could “wait it out a little bit” due to support from stimulus payments and enhanced unemployment insurance, Richardson said.

Still, those hiring bottlenecks will probably ease into the fall, she added. As more Americans get vaccinated, schools reopen, and stimulus support lapses, it’s likely labor force participation improves and more workers come off the sidelines, Richardson said.

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Americans spent $621 billion at retail stores in June, a surprise increase from May

Target Black Friday
  • The Census Bureau reported that Americans spent $621.3 billion at retail and food services businesses in June.
  • That’s a surprise 0.6% increase over May’s revised $617.9 billion spend.
  • Retail sales are higher than before the pandemic, spurred by stimulus and pent-up demand.
  • See more stories on Insider’s business page.

Americans spent $621.3 billion at retail stores and restaurants last month, according to the Census Bureau. That’s up 0.6% from the Bureau’s revised estimate of $617.9 billion in May. Economists expected a 0.4% decline over the month, according to Bloomberg.

The US economy is mainly a consumer economy, with personal consumption amounting to about two-thirds of the nation’s GDP. The Census Bureau’s monthly estimates of retail and food services spending gives a helpful indicator for how that crucial part of the economy is doing.

Retail sales plummeted during the early months of the pandemic, but quickly bounced back by last summer. Over the last few months, they’ve hit record highs, fueled by pent-up demand that was unleashed as the economy reopens and by the various government stimulus packages helping support Americans’ incomes.

While a little lower than the record highs in March and April, June’s figure shows Americans are still spending more than ever at retail storees and restaurants.

Spending at auto dealers and parts stores dropped 2.0% over the month, and the Bureau noted that retail and food services sales outside of cars increased a full 1.3% between May and June. The Bureau of Labor Statistics’ monthly Consumer Price Index inflation report earlier this week showed that prices for cars spiked dramatically over the month, with used car prices increasing a historical record-high 10.5%.

Americans seem to be getting ready to go out into the world more often. Spending at clothing stores increased 2.6% over the month to a seasonally-adjusted total of $25.8 billion, and spending at restaurants and bars rose 2.3% to $70.6 billion. As restaurants and bars continue to reopen and see expanded business, they are hiring hundreds of thousands of workers each month and raising pay.

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Job openings climb to record highs in May as the worker shortage charges on

Starbucks Now Hiring sign
A ‘We’re Hiring!’ sign is displayed at a Starbucks on Hollywood Boulevard on June 23, 2021 in Los Angeles, California.

  • US job openings rose to 9.21 million from 9.19 million in May, marking another record high.
  • Economists expected openings to hold at 9.3 million. The reading still marks a fifth straight jump.
  • Openings matched the number of jobless Americans for the first time since the pandemic began.
  • See more stories on Insider’s business page.

Job openings in the US edged higher in May as businesses continued to jostle over an unusually small supply of workers.

Openings rose to a record-high 9.21 million from 9.19 million last month, according to Job Openings and Labor Turnover Survey, or JOLTS, data published Wednesday. That landed below the median estimate of 9.33 million from economists surveyed by Bloomberg.

Job listings climbed for five straight months as vaccination began and reopening led businesses to hire. The May increase in openings also came as hiring rebounded after dismal growth in April. Taken together, the data suggests the nationwide labor shortage grew somewhat less intense as the US entered summer.

June’s payrolls data further supports the outlook. Job creation improved again, with the US adding the most payrolls since August. Still, the unemployment rate ticked slightly higher and labor force participation held steady, implying continued slack in the job market.

Experts largely expect the labor market’s recovery to accelerate further through the summer as various factors keeping Americans from work fade. The start of the school year should ease childcare pressures and the ending of enhanced unemployment benefits should also boost participation, Federal Reserve Chair Jerome Powell told lawmakers in June. There also “may be a bit of a speed limit” on matching people with openings, but that process should play out into the fall, he added.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he said in June 16 press conference. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

Hiring, layoffs, and job availability

The monthly JOLTS data – which lags the corresponding jobs report by one month – provides even more detail around pandemic-driven dislocations in the labor market. The survey took on even more relevance as the labor shortage emerged, giving economists insight into which pockets of the economy are struggling the most to rehire.

Broadly, there was an opening for every available worker in May, compared to 1.1 in April. The ratio shows the US boasting as many openings as workers for the first time since the COVID-19 recession began. By comparison, it took roughly 8 years after the financial crisis for openings to match workers.

The state and local government education and educational services sectors added the most openings, with gains of 46,000 and 35,000, respectively. The arts, entertainment, and recreation sector lost the most openings with a decline of 80,000.

Quits, which soared to all-time highs in April, fell slightly to 3.57 million from 3.99 million. Quits were most common in the professional and business services sector. While down from the April reading, the elevated quits count signals Americans are confident in their abilities to find better jobs as the economy recovers.

Layoffs also fell slightly to 1.37 million from 1.45 million. The layoffs rate dipped to a record-low 0.9%.

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June jobs report trounces expectations with 850,000 payroll gains as labor-market recovery picks up

Job interview california
Ray Liberge, 48, of Lawndale, talking to Jacky Estrada, the human-resources manager for the Zislis Group, after getting hired as a line cook at Rock’N Fish in Manhattan Beach, during a job fair at The Brews Hall in Torrance.

  • The US added 850,000 payrolls in June, beating the median estimate of a 720,000-payroll gain.
  • The unemployment rate rose to 5.9% from 5.8%. The median estimate was for a drop to 5.6%.
  • The payrolls increase is the largest since August and marks a sixth straight month of additions.
  • See more stories on Insider’s business page.

Hiring accelerated again in June as Americans returned to the workforce and reopening further juiced demand.

The US economy added 850,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday. The median estimate from economists surveyed by Bloomberg was for an increase of 720,000 jobs. The data suggests the labor shortage waned as businesses raised pay to attract workers.

The June print marks the strongest month of job growth since August and the sixth consecutive month of payroll additions. May payroll additions were revised to 583,000 from 559,000.

The unemployment rate rose to 5.9% from 5.8%. Economists expected the headline rate to hit 5.6%.

The labor-force participation rate was unchanged at 61.6%. The metric has become the go-to gauge for tracking the nationwide labor shortage. Hiring unexpectedly slowed through the spring as virus fears, childcare costs, and enhanced unemployment insurance kept Americans from seeking work. Firms have since raised wages to pull in job applications.

Average hourly earnings rose again, by 10 cents, to $30.40. The gain signals firms still lifted wages into the summer to speed up their hiring efforts.

“This pace of progress is solid and it looks like things can get even better,” Nick Bunker, an economic research director at the hiring website Indeed, said. “There’s still quite a bit of damage left to repair, but today’s report suggests that we may rebuild sooner rather than later.”

Snapshot of recovery

The monthly BLS report is among the most detailed snapshots of the labor market’s performance and gives new insights as to how the broader economy is recovering.

Even after the month’s stronger hiring, about 9.5 million Americans remain unemployed. Total payrolls are still about 6.8 million shy of their pre-pandemic peak.

The U-6 unemployment rate – which counts Americans working part time for economic reasons and those marginally attached to the workforce – rose to 10.1% on an unadjusted basis from 9.7%.

Gains were largest in the leisure-and-hospitality and accommodation sectors, where businesses added 343,000 and 75,000 payrolls, respectively. In leisure and hospitality, restaurants and bars counted for more than half of the gain.

The construction industry lost the most jobs, with a decline of 7,000 payrolls.

Roughly 6.2 million Americans named the pandemic as the primary reason their employer ended operations, down from 7.9 million. About 1.6 million cited the pandemic as the main reason they didn’t seek work, down from 2.5 million in May.

The share of Americans telecommuting fell to 14.4% through the month. That compares with the May share of 16.6%.

Experts see encouraging growth through the 2nd half

June stands to represent a turning point for the labor market’s recovery. The month saw the first few states end the federal boost to unemployment insurance ahead of its September expiration. Twenty-six states – all but one governed by Republicans – have announced plans to prematurely cancel the benefit, saying the move should encourage Americans to return to the workforce.

While the set of cancellations aren’t reflected in the June jobs report, jobless claims data out Thursday suggests the plan is working. Filings for unemployment benefits fell to 364,000 last week, beating economist estimates and marking a new pandemic-era low. Continuing claims still rose, suggesting Americans on unemployment insurance weren’t yet rushing to find jobs.

Survey data backs that up. Just 10% of surveyed job seekers urgently sought work in late May and early June, Indeed said. The most cited reasons for the slow return to work were virus fears, employed spouses, and financial cushions.

Those factors keeping Americans from taking jobs should fade as schools reopen and vaccination continues, Federal Reserve Chair Jerome Powell said. Americans can look forward to “strong job creation building up over the summer and going into the fall,” he told reporters during a June 16 press conference.

He added that while hiring stumbled in April, some of the slowdown was most likely caused by a skills mismatch between workers and open jobs. There “may be something of a speed limit” on the recovery as people look for work in new areas, Powell said.

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Only 10% of job seekers are rushing back to the workforce, hiring giant Indeed says

Job fair coronavirus florida
  • Just 10% of job seekers are urgently looking for work as firms rush to rehire, according to Indeed.
  • Virus fears and employed spouses were the most common reasons cited for non-urgent job searches.
  • More Americans should return to work as schools reopen and COVID fears fade, economist Nick Bunker said.
  • See more stories on Insider’s business page.

Businesses are jostling to rehire faster than their competitors as demand booms. The vast majority of jobless Americans can’t be bothered.

For several months now, an extraordinary labor shortage has held back the economic recovery, as job openings rocketed to record highs, but hiring has fallen below economist forecasts. More than 9 million Americans remain out of work, but for reasons ranging from enhanced unemployment insurance to childcare costs, they’re in no rush to find jobs.

New data from hiring website Indeed adds to this picture. Just 10% of job seekers were “urgently” looking for work in late May and early June, according to a survey of 5,000 Americans. About 30% said they’re not open to searching for work at all, and over 40% said they’re only “passively” looking for jobs.

Source: Indeed Hiring Lab

Some of the disparity comes from many job seekers already working, Nick Bunker, economic research director at the Indeed Hiring Lab, wrote in a blog post. The share of Americans urgently seeking work was twice as large for jobless Americans as it was for employed people. And many more employed Americans were passively looking for work.

The survey also debunked some theories as to what’s keeping Americans from rushing back to work. Among those not urgently seeking jobs, more than 20% cited virus fears as a reason for the holdup. Employed spouses and financial cushions were the second- and third-most cited reasons, respectively.

Less than 10% of respondents said enhanced jobless benefits were a reason for their lax job hunts, according to the survey. That stands in contrast with a top Republican talking point through the spring. GOP lawmakers frequently blamed UI payments for weak job take-up, and Republican governors in 25 states have moved to end the supplement before its September expiration.

To be sure, Indeed’s survey was conducted just before some states began rolling back the federal UI boost. But the data signals other factors played a much larger role in keeping Americans from joining the workforce.

Others are simply waiting for circumstances to improve. Nearly 30% of unemployed workers not searching urgently said they’re waiting for vaccinations to increase before seeking jobs. Another 30% said they’re waiting for more job opportunities, and 13% said they’re waiting for schools to reopen.

Indeed isn’t the only firm finding a wide range of factors keeping Americans from taking jobs. The pandemic fueled disruption throughout the labor market, making rehiring much more difficult than just placing Americans where they previously worked, Julia Pollak, a labor economist at ZipRecruiter, told Insider’s Juliana Kaplan.

“Some workers think their industry will never recover, and retire early. Others take a layoff personally, and opt not to return if they’re recalled,” she said. “That means returning to work requires a lot of new hiring – which is time-consuming.”

The combination of factors suggests job seeking will grow more urgent in the fall, Bunker said. After a months-long gap between business demand and worker interest, the labor market should balance out as the economy heals further.

“Many employers want to ramp up hiring quickly, but a large portion of job seekers are hesitant to start jobs now,” he said. “The further decline of COVID-19, the end of enhanced UI, and the return of school in the fall are factors that could increase the intensity of job searches by the unemployed.”

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S&P 500, Nasdaq close at record highs as mega-cap tech spurs gains

FILE PHOTO: The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New York City, New York, U.S., January 16, 2019. REUTERS/Carlo Allegri
The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New York City

  • US stocks traded near record highs Monday spurred by tech shares
  • The yield on the US 10-year Treasury note was trading at 1.482%.
  • Bitcoin rose while oil and gold slipped.

US stocks closed mostly higher on Monday, with the S&P 500 and Nasdaq both hitting record highs on the back of gains in mega-cap technology stocks.

Tech companies such as Apple, Amazon, Facebook, and Zoom outperformed. A judge on Monday dismissed antitrust lawsuits by the Federal Trade Commission that were seeking to brand the social media giant as an unlawful monopoly.

Later this week, investors will turn their attention to US non-farm payroll data on Friday. This will give an indication of how consistently the economy is recovering from the pandemic and what that might mean for the outlook for inflation.

Stocks recently have been edging higher thanks to robust economic data, the prospect of more fiscal stimulus, and continued low yields.

The yield on the US 10-year Treasury note was trading at 1.482%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Shares of Intellia Therapeutics soared as much as 63% after the company released promising data from its ongoing phase one trial of a gene-editing CRISPR drug.

Meme stock and Reddit favorite AMC Entertainment climbed higher, surging 10% following a strong weekend at the movies thanks to hot weather and the opening of “Fast and Furious 9”.

Insider is tracking the five top insider stock buys from last week.

More broadly, the US IPO market had its busiest quarter in over 20 years with newly public stocks roaring back after a downturn in May. The second quarter of 2021 saw 113 IPOs raising $39.9 billion, data from Renaissance Capital reveals.

In cryptocurrencies, bitcoin climbed 5.44% to $34,427 while ether spiked 16% to $2,095.

Ether last week saw record outflows of $50 million, the largest since 2015 and a turnaround from a broader trend this year, as a growing number of investors diversify their portfolios away from bitcoin, data from CoinShares show.

Oil prices edged lower, as a spike in COVID-19 cases in Asia stalled a recent rally ahead of this week’s OPEC+ meeting.

West Texas Intermediate crude slipped 1.61% to $72.86 per barrel. Brent crude, oil’s international benchmark, also fell 2.06%, to $74.63 per barrel.

Gold slid 0.20% to $1,778.84 per ounce. The price of the precious metal remains subdued as investors continue to assess the Fed’s policy stance.

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One chart shows the 10 industries poised to pay you a higher salary soon, and the 10 that probably won’t, according to Morgan Stanley

Hotel bellboy coronavirus
A bellman waits for residents at the Plaza Residences on Central Park South on April 02, 2020 in New York City

  • The labor shortage is uneven, leaving some industries more likely to raise wages than others.
  • The hotel, restaurants, and leisure sector is most likely to raise pay, Morgan Stanley said Monday.
  • Independent power and renewable electricity businesses are the least likely to hike wages, the bank added.
  • See more stories on Insider’s business page.

Like many aspects of the US recovery, the labor shortage is uneven.

Where some industries were able to quickly shift to telework and retain most employees through the pandemic, others are struggling to rehire. Job openings sit at a record-high 9.3 million, but hiring lagged economist forecasts for two months straight while quits reached all-time highs.

Several businesses have already raised wages in a bid to attract more workers than the competition. Yet certain sectors are still likely to see additional pay hikes as the shortage lingers, Morgan Stanley economists led by Ellen Zentner said in a Monday note.

“Wage pressures to-date have been relatively narrow, but our leading indicators point to labor market tightness in an increasing number of industries, raising the prospect of further wage increases and broadening out of wage pressures,” the team said.

Wage Pressures MS
Chart via Morgan Stanley.

Hotels, restaurants, and leisure businesses came out on top, with real estate management and development following close behind. Commercial services and supplies businesses touted the third-highest wage-risk score. Morgan Stanley homed in on which sectors are most likely to raise wages first by analyzing companies’ earnings-per-employee, estimated margins, and historic wage growth.

The sectors at the greatest risk of wage hikes shared a handful of characteristics. Many were among those hit hardest by the pandemic and related lockdowns. The top 10 sectors mostly consisted of service jobs, likely due to the mass layoffs seen in 2020. Retail businesses also face higher wage risk as consumer demand booms and businesses struggle with supply bottlenecks.

On the other end of the spectrum, producers make up most of the sectors with the softest wage risk. Independent power and renewable electricity businesses sit at the bottom of the list, followed by the oil gas and consumable fuel sector. Water utilities, tobacco, and telecom services businesses were all nearly tied for having the third-lowest wage risk.

Morgan Stanley also expects a larger share of sectors to drive wages higher. While 64% of industries saw above-trend pay growth since March, that share grew to 93% in April and reached 79% in May. A deeper look at industry-specific data shows wage pressures growing in middle- and high-wage industries, marking a departure from trends seen just before the pandemic, the team said.

Still, the elevated rate of wage growth might not be felt in the near term. Most industries’ pay hikes have been dwarfed by stronger inflation through spring. Only 21% of sectors saw pay climb faster than the Consumer Price Index in the three months through May, Morgan Stanley said. For workers to actually benefit from the faster-than-average pay growth, businesses will need to keep raising wages after the anticipated cooling of inflation.

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US retail sales slid from record highs in May amid waning reopening boost

Shopping Target
  • US retail sales fell more than expected in May as Americans settled into a new normal.
  • Spending dropped 1.3% through the month. Economists expected a decline of 0.7%.
  • The reading marks the largest decline since February, but sales still sit 28% higher from May 2020.
  • See more stories on Insider’s business page.

Spending at US retailers slumped for the first time since February last month as more economic restrictions were reversed and Americans settled into a new sense of normal.

US retail sales fell 1.3% in May, the Census Bureau said Tuesday. Economists surveyed by Bloomberg held a median estimate for a 0.7% decline. The decline places monthly sales at $620 billion and just below the record-high seen in April.

The April sales data was revised higher to a 0.9% jump from an initially unchanged reading.

While sales sit lower than the previous total, they’re still up 28% year-over-year and 18% from pre-pandemic highs. The May 2020 sales report showed spending surge as stimulus included in the $2.2 trillion CARES Act revived economic activity. It also marked the largest one-month sales jump in data going back to 1992.

Spending in the clothing and accessories industry was up 200% year-over-year, while sales at food services and bars sat 71% higher from the year-ago period.

Sliding sales and rising inflation

The May dip in retail spending suggests that, after reopening unleashed pent-up demand, consumers are pulling back. Retail sales were among the few indicators to stage a V-shaped rebound early in the pandemic and quickly exceed pre-crisis levels. Now, as stimulus dries up and the final lockdown measures are unwound, spending is set to moderate.

Such a trend would be good news for those fearing runaway inflation. The wave of consumer demand and various bottlenecks throughout the economy led price growth to accelerate sharply through the spring. The Consumer Price Index rose 0.6% in May, beating the median estimate for a 0.4% jump.

The gauge also rose 5% year-over-year, marking the fastest one-year inflation rate since 2008. Though the reading is somewhat skewed by falling prices in May 2020, it still signals inflation firmed up as massive demand ran up against widespread supply shortages. A steady dip in retail sales could hint at softer demand through the summer.

But whereas fiscal stimulus like direct payments and enhanced unemployment insurance will soon lapse, monetary policy remains highly accommodative. The Federal Reserve has indicated it is willing to run the economy hot to foster a faster and more inclusive recovery for the labor market. The central bank continues to hold interest rates near zero and buy at least $120 billion in assets each month to maintain its policy stance.

The Federal Open Market Committee will give the next hint at when the Fed will retract its support on Wednesday, following its two-day meeting. Policymakers are expected to hold interest rates and purchase pace steady but note the committee has begun talks on when to taper its asset-buying. Fed Chair Jerome Powell will likely acknowledge that, while inflation has exceeded estimates, the elevated rate will prove temporary as supply-chain strains are solved.

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Having a job right now means longer hours and slow pay growth

restaurant worker New York City NYC
A restaurant worker wears a protective face mask and gloves in midtown as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 13, 2020 in New York City.

  • While new hires are benefitting from rising pay and new incentives, employed Americans face worsening conditions.
  • The average workweek rose through the spring, and wage growth for the employed weakened.
  • The trends come as quits sit at record highs, suggesting Americans are leaving jobs to benefit from the labor shortage.
  • See more stories on Insider’s business page.

Americans waiting to rejoin the workforce have a lot going for them. Businesses rushing to rehire are raising wages and throwing in other incentives ranging from signing bonuses to free iPhones.

It’s another story for employed Americans. By some measures, their work lives are actually worsening.

The sudden reopening of the US economy placed the labor market in a unique spot. After years of strained job supply and an abundance of workers, the formula flipped. Employers were suddenly struggling to hire, and workers were in short supply.

The so-called labor shortage has led businesses to step up their efforts to attract workers. Average hourly earnings ballooned for two months straight as employers boosted pay, particularly for new hires. But for those already employed, data shows a decline in conditions.

For one, average weekly hours have crept higher through the spring. Work hours dipped slightly to 34.3 in May, landing just below 20-year highs. The latest reading compares to a pandemic-era low of 33.4 hours. Some of the uptick is likely due to part-time workers converting to full-time, but the trend could also suggest employed Americans are working more as the country rebounds.

Wage Growth Tracker
Source: The Federal Reserve Bank of Atlanta.

Those additional hours are also yielding less in return. Wage growth for already-employed Americans has been on the decline through the year, most recently falling to an unweighted three-month moving average of 3% from 3.2% in May. By comparison, the average rose as high as 3.9% in late 2019.

The growing workweeks and slowing pay growth come amid a major shakeup in the US labor force. Quits rose to a record high in April, according to JOLTS data published last week. At the same time, payroll growth slowed sharply and job openings leaped to a record high. Taken together, the data signals a broad rethink of how Americans work and what they demand as compensation.

A Monday report from the Federal Reserve Bank of New York shed new light on the unusual labor-market situation. The mean perceived probability of losing one’s job fell to 12.6% in May, the lowest level since the Fed’s survey began in 2013.

Yet the mean perceived probability of finding a job after losing work rose to 54% from 49.8%, according to the report, the largest one-month gain on record and the gauge’s highest level since February 2020. The gain suggests Americans are the most confident in their chances of finding work since the pandemic recession began.

With quits at record highs and incentives for new hires growing more attractive, workers could be switching jobs to take advantage of the labor shortage and extraordinary demand from employers.

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Job openings rise to new record-high in April as US labor shortage slows hiring

Hiring sign labor market coronavirus
People walk by a Help Wanted sign in the Queens borough of New York City on June 04, 2021 in New York City.

  • US job openings jumped to 9.3 million from 8.3 million in April, setting a new record high.
  • The reading comes in above the median estimate of 8.2 million and marks a fourth straight gain.
  • Roughly 1.1 Americans competed for every opening, down from 1.2 as the labor shortage intensified.
  • See more stories on Insider’s business page.

Demand for workers in the US intensified in April as nationwide reopening squared off with an unprecedented labor shortage.

Job openings rose to a record-high 9.3 million from 8.3 million in April, according to Job Openings and Labor Turnover Survey, or JOLTS, data released Tuesday. Economists surveyed by Bloomberg held a median estimate of 8.2 million openings.

The reading marks a fourth consecutive jump in openings. The report also sheds more light on how the labor market performed through April. The month’s nonfarm payrolls report, released in early May, showed hiring drastically slowing as businesses reported difficulties finding workers.

The April payroll gains have since been revised slightly higher, and data published last week showed hiring rebound in May. Yet job growth is still down from the pace seen in March despite openings climbing further. Democrats have attributed the slowdown to a push for higher wages, while Republicans largely blame enhanced unemployment insurance.

The Tuesday JOLTS report showed fewer Americans competing for each opening. About 1.1 available workers existed for each open job, down from 1.2 in March. The reading compares to a pre-pandemic average of 0.8 and a crisis peak of 5.

A detailed look at April hiring and firing

Like the jobs report published on Friday, the JOLTS release includes more a granular look at which sectors thrived and which lagged, albeit one month behind the Bureau of Labor Statistics’ report.

The accommodations and food services sector added the most job openings throughout April, with a gain of 349,000 positions. The educational services sector shed 23,000 openings, setting the month’s largest decline.

Separations, which include layoffs and quits, jumped by 324,000 to 5.8 million.

Quits rose to a record-high 4 million from 3.6 million. Layoffs and discharges fell by 81,000 to 1.4 million, mirroring the downward trend in weekly jobless claims.

The US hiring rate held steady at 4.2%. That’s just above the pre-pandemic trend and suggests the labor shortage intensified through April.

The latest labor-market diagnosis

While the JOLTS report lends more detail to how the economy fared in April, Friday’s jobs report gave the most up-to-date look at the labor market’s performance. The US added 559,000 nonfarm payrolls last month, missing the median estimate of 674,000 jobs but improving significantly from the April pace.

The unemployment rate fell to 5.8% from 6.1%. The decline, powered by strong hiring and a slight drop in labor-force participation, beat the median estimate of 5.9%.

Economists largely viewed the report as a lukewarm print. “With unemployment benefits set to fade in the fall, we may be waiting until the end of summer before we see clear evidence of a fundamentally healing labor market,” Seema Shah, chief strategist at Principal Global Investors, said.

The Friday report also showed wages surging for a second consecutive month. Economists have looked to average hourly earnings for signs of whether labor shortages are merely overblown anecdotes or signs of a more widespread shift. Combined with the marked climb in openings through the spring, the strong upward pressure on wages backs up reports that Americans are holding off on returning to work.

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