Job openings in the U.S. dropped to their lowest level since January 2021, adding to signs of a slowing labor market. The Bureau of Labor Statistics reported 7.67 million open positions at the end of July, down from 7.91 million in June. The July figure fell short of economists’ expectations, who had predicted 8.1 million job openings for the month. June’s initial figure was also revised downward from 8.18 million. The Job Openings and Labor Turnover Survey (JOLTS) report revealed other key labor indicators.
The hiring rate rose slightly to 3.5%, while the number of hires increased to 5.5 million. Additionally, the quits rate, which indicates worker confidence in finding new jobs, edged up to 2.1% from June’s 2%. Nancy Vanden Houten, senior U.S. economist at Oxford Economics, noted that the decline in job openings shows “demand for labor continues to ease.” She added that the labor market’s slowdown is becoming increasingly evident.
In his late August speech, Federal Reserve Chair Jerome Powell highlighted the cooling labor market, stating that the central bank no longer sees it as a source of inflationary pressure. Powell cautioned, however, that the Fed is closely monitoring further shifts in employment trends, as they could signal a deeper slowdown. UBS Chief U.S. economist Jonathan Pingle stated that more significant signs of labor market deterioration would increase the likelihood of the Federal Reserve cutting interest rates.
The FedWatch Tool now shows nearly a 50% chance of a rate cut by 50 basis points in September, up from a 38% probability the day before. Another key data point from the JOLTS report was the ratio of unemployed workers to job openings, which fell to 1.07 in July. This ratio is lower than pre-pandemic levels, suggesting a continued cooling of labor demand. Economists are now awaiting the August jobs report, due Friday, for more insight. Forecasts predict the U.S. added 165,000 jobs last month, with unemployment expected to drop slightly to 4.2%, marking the first decline in the unemployment rate since March.