US hiring drops as resignations fall to lowest in nearly 6 years

WASHINGTON – US job openings increased by the most in five years in April, but the surge likely overstates the labour market’s health, as hiring declined against the backdrop of economic uncertainty stemming from the Iran war.

Hires dropped by 419,000 to 5.116 million in April, suggesting the solid increase in non-farm payrolls that month was mostly because of lower layoffs. The nearly broad-based decline was led by a decrease of 131,000 in professional and business services.

The Job Openings and Labor Turnover Survey from the US Labor Department on June 2 also showed resignations dropped to their lowest level in nearly six years in April, signalling a lack of confidence in the jobs market.

Economists said the labour market had not shifted from its “slow-hire, slow-fire” mode, warning of downside risks from the three-month US-backed war with Iran, which has caused shortages and boosted prices of commodities, including energy products and aluminium.

“The labour market remains mostly stable,” said Matthew Martin, senior US economist at Oxford Economics.

“Without a concrete end to the war in Iran in sight, higher oil prices will reduce aggregate demand by crimping real incomes. Coupled with increased uncertainty, businesses are likely to pull back further on hiring intentions.”

Job openings, a measure of labour demand, surged by 731,000 to 7.618 million at the end of April, the highest level since May 2024, said the Labor Department’s Bureau of Labor Statistics. Economists polled by Reuters had forecast 6.88 million unfilled jobs.

The professional and business services industry accounted for roughly 91 per cent of the jump in job openings in April. Openings there rose by 668,000, which some economists said was an anomaly.

“Sharp drops in openings in this sector in previous months have been revised away as more data have been collected,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics. “It is just as likely that April’s big increase in openings also proves illusory.”

Healthcare and social assistance had an additional 89,000 unfilled positions. There were increases in vacancies in the construction, manufacturing, transportation, warehousing and utilities industries, as well as in state and local governments.

Job openings in the finance sector decreased by 134,000, all of them in finance and insurance. Accommodation and food services vacancies dropped by 74,000, while retail trade had 43,000 fewer unfilled positions.

The US labour market had regained its footing after wobbling in 2025 under the weight of uncertainty, largely from import tariffs. But just as the drag from trade policy was lifting, the war with Iran, which has raised petrol and diesel prices, has cast a cloud over the labour market and could be impacting hiring.

The April hires rate fell to 3.2 per cent from 3.5 per cent in March.

Retail trade hires fell by 81,000. There were also notable declines in hiring in the transportation, warehousing and utilities, finance, healthcare and social assistance, and accommodation and food services sectors.

With hiring weak, fewer workers are job-hopping.

Resignations in April dropped by 183,000 to 2.977 million, the lowest level since August 2020, during the Covid-19 pandemic. The decline was the largest in a year.

The quits rate, viewed by policymakers and economists as a measure of job market confidence, slipped to 1.9 per cent from 2 per cent in March.

The lower quits rate suggests wage inflation is not an issue for the Federal Reserve as it confronts rising and broadening price pressures because of the Middle East conflict.

Financial markets expect the US central bank to keep its benchmark overnight interest rate in the 3.5 per cent to 3.75 per cent range into 2027. Inflation increased at its fastest pace in three years in April, the government reported last week.

Though employers are not boosting headcount, they are not engaging in mass layoffs, anchoring the labour market. Layoffs and discharges dropped by 192,000 to 1.692 million in April. “Neither employees nor employers are looking to make changes to employment in the near term,” Oxford Economics’ Martin said. REUTERS