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Job market gains momentum in July despite recession signals elsewhere

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Posted at 8:28 AM, Aug 30, 2022
and last updated 2022-08-30 17:29:37-04

The U.S. economy had about 11.2 million open jobs in July, a slight increase from June. It is the latest sign of strength in a historically strong labor market.

Since May 2021, there have been almost two open jobs for every person seeking work.

"It's still one of the best job markets that I've ever seen, and I've been doing this for 16 years," said Jason Wachtel, the co-founder of job placement firm JW Michaels & Co.

Some areas, like manufacturing and health care, saw increased available jobs compared to June.

But July's data reflected a cool down in other areas. There were fewer open jobs in construction, finance and the leisure and hospitality sector.

And there are signs that job-hopping has slowed down.

July's "quits rate," which measures how many people leave their jobs each month, was 3.9%. It's one of the lowest rates recorded in the last 18 months.

"It may be softening slightly, but it's certainly not a major change in the dynamic," said Scott Blumsack, chief strategy officer at Monster. "If you look based on historical trends, [quitting] is still much more prevalent than it had been."

Blumsack said the current conditions give employers an extra reason to try to hang on to employees. That could make it the right time to negotiate.

"It may not be as easy to get those outsize raises as you had in the past," Blumsack said. "But there are opportunities, especially if it's been a while since you've had that last salary negotiation discussion, to bring it up."

Many analysts wonder how long the job market can remain strong. The Federal Reserve has said it will continue to raise interest rates in an effort to lower inflation.

"You would expect, as the interest rate continues to rise, both businesses and consumers would pull back on investment," Blumsack said. "You would think that would lead to a softening of the number of jobs that are out there. We haven't seen that play out yet."

Both experts said it's likely that interest rate hikes will eventually cool off the job market.

"But I do think it's gonna take a while to sort of work its way through the system," Blumsack said. "I don't think there's a magic bullet where we raise interest rates, all of the employment market reacts, inflation comes down, and that all happens in a really finite period of time."

In the meantime, job-seekers will continue to find work quickly.

The average unemployed worker needed 8.5 weeks to find a new job, according to Labor Department data from July. It took six weeks longer in 2021.

"We haven't heard one candidate say, 'Is it still a good market?'" Wachtel said. "They know it's a good market. They're getting called by a million recruiters."