Job openings hit a 3½-year low in July, according to the Labor Department’s report on Wednesday, indicating a slack in the labor market. The Job Openings and Labor Turnover Survey revealed a decrease to 7.67 million available positions for the month, down by 237,000 from the revised June figure and the lowest level since January 2021. Economists surveyed by Dow Jones had anticipated 8.1 million job openings.
The decline brought the ratio of job openings per available worker to less than 1.1, nearly half of its peak of over 2 to 1 in early 2022. This data is likely to support Federal Reserve officials who are expected to start reducing interest rates at their upcoming policy meeting on Sept. 17-18, as they closely monitor the JOLTS report for labor market strength.
Nick Bunker, head of economic research at the Indeed Hiring Lab, noted, “The labor market is no longer cooling down to its pre-pandemic temperature, it’s dropped past it.” He emphasized the importance of not allowing the labor market to further deteriorate.
While job openings decreased, layoffs rose to 1.76 million, an increase of 202,000 from June. Total separations also increased by 336,000, raising the separations rate to 3.4% of the labor force. However, hires saw an increase of 273,000, resulting in a rate of 3.5%, which was 0.2 percentage points higher than June.
The professional and business services sector saw the largest increase in job openings with 178,000. Conversely, private education and health services decreased by 196,000, trade, transportation, and utilities declined by 157,000, and government, a significant source of job gains in recent years, decreased by 92,000.
Krishna Guha, head of the Global Policy and Central Bank Strategy Team at Evercore ISI, mentioned that the report raises concerns about the economy slowing down but does not indicate a rapid deterioration in the labor market. He highlighted that the low level of layoffs and the increase in hires suggest that the labor market remains stable, although the demand for workers is softening relative to the supply.
The report was released two days before the crucial August nonfarm payrolls count by the Labor Department, scheduled for Friday. The report is expected to show an increase of 161,000 jobs and a slight decrease in the unemployment rate to 4.2%.
