Vacancies are down by half one million

The Labor Department reported on Thursday that there were about half a million fewer job vacancies in May than in the previous month, which is at least a modest sign that the extremely tight labor market may be easing somewhat.

The closely-watched Job Vacancies and Labor Turnover Survey showed job vacancies fell to 9.82 million, down 496,000 from April and below FactSet’s consensus estimate of 9.9 million. Job vacancies outpaced the available labor pool by 1.6 to 1 for the month, up from more like 2 to 1 just a few months ago.

The decline would have been even greater had it not been for an increase of around 61,000 jobs in government-related positions. Vacancies in health and social work (-285,000) and in finance and insurance (-139,000) fell.

The report comes amid conflicting signs of where the job market is headed.

On Thursday, payroll service provider ADP reported an impressive 497,000 new private sector jobs in June, more than double the Dow Jones estimate of 220,000.

This report raised fears that the Federal Reserve would have to continue to crack down on inflation and raise interest rates further.

In a speech Thursday morning, Dallas Fed President Lorie Logan said she was concerned that inflation is not falling fast enough and that tighter monetary policy will be needed, particularly to address imbalances in the labor market.

“The number of vacancies remains well above the level of 2019. The number of layoffs remains low. There is no sign of an abrupt deterioration in labor market conditions,” Logan said in a speech at Columbia University in New York.

“The continued prospects of above-target inflation and a stronger-than-expected labor market call for tighter monetary policy,” she added.

The JOLTS report showed an increase in the number of layoffs, which is often indicative of a tight labor market, with workers confident that they can leave their current jobs for better opportunities. Cancellations rose by 250,000, taking the rate to 2.6%, up 0.2 percentage point.

Hiring rose slightly while layoffs and layoffs declined.

In a separate report Thursday morning, the ISM services index for June reported an unexpected rise to 53.9, in line with the proportion of companies reporting expansion. That was up from 50.3 in May and above the 51.3 estimate. A value above 50 indicates expansion.

The employment index returned to the expansion zone, rising 3.9 points to 53.1. However, the price index fell 2.1 points to 54.1. Business activity and production jumped to 59.2, up 7.7 points.

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