Economists said worries of deep government spending cuts and higher taxes scheduled to kick in at the start of 2013 and Europe's on-going debt crisis were making companies hesitant to take on new workers. There are fears that politicians in Washington will be unable to avoid the so-called fiscal cliff, in a repeat of last year's debt ceiling debacle, which cost the country its cherished AAA credit rating from Standard and Poor's.
"Hiring actually slowed in June, an indication that firms may be willing to leave some jobs unfilled until the uncertainty of the election and the fiscal cliff are clarified," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "A moderation in terminations supports that conclusion." Layoffs in June fell by 149,000 to 1.81 million, coming mostly from the government side. In June, job openings rose almost across the board, with noticeable gains in education and health-care services, and at hotels and restaurants.
The government continued to see a decrease in job openings, mostly reflecting belt-tightening by state and local governments. On the hiring side, there were increases only in the construction sector and at hotels and restaurants in June "This is in line with the solid data we have seen from the housing sector in recent months," said Cooper Howes, an economist at Barclays in New York.
"We expect residential construction will provide a boost to hiring as the housing market recovery continues to outpace that of the labour market as a whole." Despite the rise in vacancies in June, there are no jobs for more than two out of three unemployed workers, undercutting the argument that much of the unemployment problem afflicting the economy is the result of a skills mismatch.