U.S. job openings push higher; more workers quitting

2/2 © Reuters. FILE PHOTO: FILE PHOTO: Job seekers apply for the 300 available positions at a new Target retail store in San Francisco 2/2

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job openings increased further in July, though more workers quit their jobs in the retail as well as professional and business services industries likely because of fears of exposure to COVID-19 and problems with childcare.

Despite the surge in vacancies reported by the Labor Department on Wednesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS, the number of unemployed people competing for a new job remained relatively high in July.

"The labor market recovery will be measured in years, not months," said Chris Rupkey, chief economist at MUFG in New York.

Job openings, a measure of labor demand, jumped 617,000 to 6.6 million on the last day of July. Still, vacancies remain below their level of 7 million in February.

Job openings were led by the retail sector, with 172,000 new vacancies. There were an additional 146,000 jobs in healthcare and social assistance. In the construction industry, job openings increased by 90,000. The job openings rate shot up to 4.5%, the highest since October 2019, from 4.2% in June.

U.S. financial markets were little moved by the data.

The number of people voluntarily quitting their jobs increased 344,000 to 2.9 million. There were 152,000 workers who quit their jobs in the retail sector. In the professional and business services sector, 98,000 workers left. State and local government education reported 35,000 workers quit in July.

Graphic: Job openings, hires and quits DataStream Chart - https://fingfx.thomsonreuters.com/gfx/rngs/USA-STOCKS/010071P436X/DataStream-Chart.htm

CHILDCARE CHALLENGES

While schools have opened for the new academic year, many are conducting virtual classes. Problems securing childcare have forced some workers, mostly women, to resign from their jobs. The labor participation rate for women dropped in April to levels last seen in the late 1980s and has not rebounded much since.

The quits rate, which under normal circumstance is viewed by policymakers and economists as a measure of job market confidence, increased to 2.1% in July from 1.9% in June.

"More quits during the pandemic are probably a reflection of virus fear and challenges related to childcare given the current weak state of the labor market," said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York.

The JOLTS report followed on the heels of news last Friday that the economy created 1.371 million jobs in August after adding 1.734 million in July. About 10.6 million of the 22.2 million jobs lost at the depth of the coronavirus pandemic have been recovered.

In July, there were 2.5 people per job opening.

The JOLTS report showed hiring dropped by 1.183 million jobs to 5.8 million in July. Hiring decreased by 599,000 jobs in the accommodation and food services sector. It fell by 137,000 in the healthcare and social assistance industry.

But federal government hiring increased by 33,000, largely because of recruitment for the 2020 Census.

Overall, the hiring rate fell to 4.1% from 5.1% in June.

Layoffs abated in July, declining 274,000 to 1.7 million, the lowest since March 2019. There were decreases in manufacturing, transportation, warehousing, utilities and wholesale trade industries.

Though layoffs as measured by the number of new claims for unemployment benefits remain elevated, economists believe the worst of the job cuts related to the pandemic is likely over.

"It remains difficult to understand why various measures related to layoffs have sent different signals in recent months, but several of the key measures suggest that we have moved past the worst of the layoffs associated with the virus spread," said Daniel Silver, an economist at JPMorgan (NYSE:JPM) in New York.