Job openings fell to a 3½-year low in July, adding pressure on the Fed's next move
Job openings fell to their lowest level in three and a half years in July, according to the US Department of Labor's latest Job Openings and Labor Turnover Survey (JOLTS), according to CNBC.
The number of available positions dropped by 237,000 to 7.67 million from June’s revised figures, marking the lowest since January 2021. Economists had forecasted 8.1 million job openings, according to Dow Jones.
This drop reduced the job openings-to-available-worker ratio to below 1.1, a sharp decline from its peak of more than 2-to-1 in early 2022.
The data could push the Federal Reserve to consider lowering interest rates during their next policy meeting on September 17-18, as officials monitor the JOLTS report for labour market trends.
Nick Bunker, head of economic research at Indeed Hiring Lab, commented on the report, stating, “The labour market is no longer cooling down to its pre-pandemic temperature, it’s dropped past it. Nobody, and certainly not policymakers at the Federal Reserve, should want the labour market to get any cooler at this point.”
Layoffs increased in July, rising by 202,000 to 1.76 million, with total separations jumping by 336,000. This increase pushed the separations rate up to 3.4 percent. Meanwhile, hires saw an uptick of 273,000, bringing the hiring rate to 3.5 percent, an improvement from June’s numbers.
In sector-specific data, professional and business services experienced the largest increase in job openings, adding 178,000 positions.
On the other hand, private education and health services saw a drop of 196,000, trade, transportation, and utilities declined by 157,000, and government jobs decreased by 92,000.
Despite concerns about a slowing economy, Krishna Guha, head of the Global Policy and Central Bank Strategy Team at Evercore ISI, suggested the report does not indicate a rapid deterioration in the labour market.
“The still low level of layoffs and tick up in hires suggests the labour market is not cracking. But demand for workers continues to soften,” he said.
The report precedes the upcoming August nonfarm payrolls data, due Friday, which is expected to show an increase of 161,000 jobs and a slight decrease in the unemployment rate to 4.2 percent.
