The U.S. labor market slumped below forecasts in July as job openings fell to their lowest point since January 2021, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), released on Wednesday (Sept. 4).
Vacancies decreased to 7.7 million in July from June’s downwardly revised level of 7.9 million, a decrease of roughly 237,000. Economists had anticipated a higher figure of 8.1 million job openings for July, according to a Dow Jones survey.
“The labor market has not only cooled down to its pre-pandemic levels, but it has dropped beyond that point,” said Nick Bunker, head of economic research at the Indeed Hiring Lab, told CNBC. “At this stage, no one, especially policymakers at the Federal Reserve, should want the labor market to slow down any further.”
While job openings declined, layoffs increased to 1.76 million, marking a 202,000 rise from June. Total separations also jumped by 336,000, pushing the separation rate up to 3.4% of the labor force. However, hires saw an uptick as well, with 273,000 more hires reported, pushing the hiring rate to 3.5%, a 0.2 percentage point improvement over the previous month.
The professional and business services sector experienced the largest increase in job openings, up by 178,000. In contrast, significant declines were noted in private education and health services (-196,000), trade, transportation, and utilities (-157,000), and government jobs (-92,000), a sector that has been a leading source of job growth in recent years.
Despite the downward trend in openings, the report does not indicate a severe weakening of the labor market.
“The still low level of layoffs and increase in hiring suggest the labor market is not collapsing,” said Krishna Guha, head of Global Policy and Central Bank Strategy at Evercore ISI, told reporters. “However, demand for workers continues to soften relative to supply, and this trend is likely to persist under restrictive policy conditions.”
The JOLTS report precedes the Labor Department’s pivotal August nonfarm payrolls release, due on Friday (Sept. 6). Economists expect an increase of 161,000 jobs and a slight decrease in the unemployment rate to 4.2%.