In a surprising turn of events, the latest jobs report from the U.S. Bureau of Labor Statistics revealed that job openings in the country fell to a 28-month low in July. The report indicated that there were 8.8 million job openings, which is below economists' forecasts of 9.6 million. This decline in job openings comes as a surprise, as the labor market had been showing signs of strength in recent months.
The job openings rate also fell from 5.8% in June to 5.3% in July. Additionally, job listings dropped to 9.2 million in June, marking the fewest number of job openings since March 2021. The largest declines in job openings were seen in professional and business services and healthcare.[0]
Despite the decline in job openings, the labor market remains relatively robust. Job openings have fallen from 11.3 million one year ago but still remain above the pre-pandemic level of about 7 million. This reflects a gradually slowing labor market, but one that is still stronger than before the pandemic.[0]
The decline in job openings in July was broad-based, with declines seen in most major sectors. The biggest declines were observed in professional and business services, healthcare and social assistance, and state and local government (excluding education).[1] On the other hand, job openings increased in transportation, warehousing, and utilities.[2]
The decrease in job openings also coincided with a decline in the quits rate, which measures voluntary job leavers as a share of total employment. The quits rate fell to 2.3%, the lowest since the start of 2021. This suggests that Americans are less confident in their ability to find another job in the current labor market. The quits rate among private sector workers also fell to 2.5%.
Federal Reserve Chairman Jerome Powell addressed the declining job openings and quits rate in his speech at the Jackson Hole Symposium.[3] Powell noted that the decline in job openings reflects a large excess demand for labor.[4] He also stated that the Fed expects the rebalancing in the labor market to continue, but they will closely monitor whether the tightness in the labor market is easing.[3]
The decline in job openings and the decrease in worker confidence to quit their jobs could have implications for the Federal Reserve's monetary policy. The Fed has been trying to bring down inflation, and an imbalance between worker demand and supply could cause wages to rise and add upward pressure on inflation.[5] The central bank has been raising interest rates to tame higher prices, but if the labor market continues to cool, it may weigh against further rate hikes.[5]
Overall, the latest jobs report indicates a cooling labor market, with fewer job openings and a decrease in worker confidence to quit their jobs. While the labor market remains relatively strong compared to pre-pandemic levels, the decline in job openings raises concerns about the future trajectory of the economy and inflation. The Federal Reserve will closely monitor these developments as it navigates its monetary policy decisions.[6]
0. “Job Openings Continue Slow Decline” SHRM, 29 Aug. 2023, https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/jolts-job-openings-quits-turnover-sept-2023.aspx
1. “Job Vacancies Fall To 28-Month Low, Signaling Cooling Job Market – SPDR S&P 500 (ARCA:SPY)” Benzinga, 29 Aug. 2023, https://www.benzinga.com/economics/macro-economic-events/23/08/34092590/job-vacancies-fall-to-28-month-low-signaling-cooling-job-market
2. “JOLTS job report on hires, quits points to a labor slowdown” UPI News, 29 Aug. 2023, https://www.upi.com/Top_News/US/2023/08/29/jolts-quits-labor-hiring-economy/1341693320875/
3. “JOLTS Job Openings fall to 8.82 million in July vs. 9.46 million expected” FXStreet, 29 Aug. 2023, https://www.fxstreet.com/news/us-jolts-preview-job-openings-set-to-decline-further-in-july-202308290832
4. “Slower US Job Growth to Support Fed Patience” Yahoo Finance, 27 Aug. 2023, https://finance.yahoo.com/news/slower-us-job-growth-support-200000242.html
5. “US job openings fall below 9 million for the first time since March 2021” CNN, 29 Aug. 2023, https://www.cnn.com/2023/08/29/economy/jolts-job-openings-layoffs-july/index.html
6. “Job openings drop more than expected in July to 2-year low” Fox Business, 29 Aug. 2023, https://www.foxbusiness.com/economy/job-openings-drop-more-expected-july-two-year-low
