There were dozens of encouraging signs about the future of the U.S. labor market that were highlighted in the July Bureau of Labor Statistics report. Our team at Acara is here to break down the numbers and explain why these latest developments—such as significant job growth and reduced unemployment rates—signal promising developments for the American job market.
An abundance of open jobs
Recent data unveiled that a record number of job openings were available in June. Over 10.1 million employment openings were reported on the last business day of the month—a significant increase from the 9.5 million that were open in May. While this number demonstrates the positive labor market trends, the widening gap highlights the difficulties that both large and small-sized businesses are experiencing when trying to find qualified workers.
Hiring outgrows job openings
In another surprise of events, hiring rates (up almost 12 percent) grew faster than job openings (up 6 percent) last month. According to the report, nonfarm payrolls increased by 943,000—the best such increase since August 2020. In addition, average hourly earnings increased more than expected. Not only did wages rise 0.4 percent from June to July, but they are also up 4.7 percent since the same time last year.
Decline in unemployment rates
Supplementing the nearly one million jobs that were added last month, the nationwide unemployment rate declined by 0.5 percentage points from 5.9 percent in June to 5.4 percent in July. This is the lowest unemployment rate since March 2020—otherwise known as the last month before the coronavirus threw the U.S. economy into a recessionary period. The recent hiring surges and the declines in unemployment numbers have validated the resilience of the rebounding American economy.
Leisure and hospitality lead the way
In what has been a pervasive trend over the past several months, the greatest job growth came within the leisure and hospitality industry. Of the 380,000 positions that were added within this sector, two-thirds of them—about 253,000 roles—opened at bars and restaurants. Despite the tremendous drubbing that this industry took during the pandemic’s early going, the consistent job creation in recent weeks has been incredibly reassuring. Other areas of significant job growth occurred in the local government, education, and professional and business services sectors.
Employee confidence in the market
According to the Bureau of Labor Statistics’ JOLTS report, 3.9 million workers quit their jobs in June alone. Although this number is down slightly from previous months like April—when 4 million people resigned from their roles—this trend demonstrates the supreme confidence of workers in the labor market to secure new positions. As the candidate-friendly market continues to heat up, qualified candidates are in high demand—and companies nationwide are doing whatever it takes to secure them. Case in point: a recent study conducted by ADP showed that average wage growth has increased 5.8 percent for job switchers compared to 2020 rates.
The latest employment numbers and labor market trends from the months of June and July are proof of the ongoing revival of the U.S. economy. Despite a significant surge in COVID-19 cases due to the highly contagious Delta variant, job growth has held strong in recent weeks. While it remains to be seen how much this strain of the virus will impact unemployment rates in the months ahead, Americans should hope for ongoing labor and employment growth as the U.S. economy continues its gradual improvement.
Is your organization pressed with high rates of employee turnover? Need some help in overcoming labor shortages? Check out this latest blog on how to effectively entice candidates and recruit talent to join your company.
Looking to learn more about current labor market trends? Check out this recent employment update report from our Acara team.
To view the full Bureau of Labor Statistics report for the month of July, you can read it here.