Job Openings Plummet to 3½-Year Low

In a further indication of a weakening labor market, the U.S. Department of Labor reported on Wednesday that job openings declined to their lowest level in three and a half years. The closely watched Job Openings and Labor Turnover Survey (JOLTS) revealed that available positions fell to 7.67 million in July, a decrease of 237,000 from the downwardly revised June figure.

Economists had anticipated a slightly higher number of 8.1 million job openings. The decline in available positions has reduced the ratio of job openings to available workers to just above 1:1, significantly lower than the peak of over 2:1 seen in early 2022. This data is likely to bolster the Federal Reserve’s inclination to begin lowering interest rates at its upcoming policy meeting in September. The central bank closely monitors the JOLTS report as a key indicator of labor market strength.

The US labor market is not merely cooling down but has surpassed its pre-pandemic level. He emphasized that neither policymakers nor the general public should desire any further cooling of the labor market at this point.

While job openings have decreased, layoffs have risen to 1.76 million, an increase of 202,000 from June. Total job cuts jumped by 336,000, pushing the job cuts rate as a percentage of the labor force up to 3.4%. However, hiring has also increased, with 273,000 more jobs filled in July.

This JOLTS report comes just two days before the highly anticipated release of the August nonfarm payrolls data on Friday. Economists are forecasting an increase of 161,000 jobs and a slight decrease in the unemployment rate to 4.2%.