Hiring falls below pre-pandemic levels as employers pull back in a cooling job market

There were 8.18 million job vacancies in June, down from 8.23 million in May, the Labor Department reported Tuesday.

The U.S. economy and job market have proven remarkably resilient despite the Federal Reserve’s aggressive campaign to tame inflation by raising its benchmark interest rate to a 23-year high. But higher borrowing costs have taken a toll: Job openings peaked in 12.2 million and have come down more or less steadily ever since.

Still, 8.2 million is a strong number. Before 2021, monthly job openings had never topped 8 million.

The Fed views a drop in vacancies as a relatively painless way — compared to layoffs — to cool a hot job market and reduce pressure on companies to raise wages, which can feed inflation.

Job growth has slowed, too. So far this year, employers are adding an average 222,000 jobs a month. That is a healthy number but down from an average 251,000 last year, 377,000 in 2022 and a record 604,000 in 2021 as the economy roared back COVID-19 lockdowns.

The hires rate slowed to 3.4% in June, down from a post-pandemic peak of 4.1% and below its 2019 level of 3.9%.

“The labor market is now slacker and slower than before the pandemic, and the pace of hiring is the slowest it has been since 2014, outside of the brief pandemic recession,” Julia Pollak, chief economist at ZipRecruiter, said in a note.

The Labor Department releases July numbers on job creation and unemployment on Friday. According to a survey of forecasters by the data firm FactSet, the economy likely created 175,000 jobs in July, decent but down from 206,000 in June. The unemployment rate is forecast to have stayed at a low 4.1%.

The Fed is widely expected to leave interest rates unchanged at its meeting this week but to begin cutting them at its next gathering in September.