Ministry of Labor July Job Openings and Turnover Report
Number of Job Openings at 7.67 Million, 'Below Expectations'
1.1 Job Openings per Unemployed Person... Lowest in 3 Years
The number of job openings in the U.S. in July fell short of market expectations, marking the lowest level in three and a half years. Layoffs increased. Signals have been steadily emerging that the U.S. labor market is gradually cooling ahead of the Federal Reserve's (Fed) interest rate cut in September. Treasury yields have plunged sharply, and the likelihood of a big cut (a 0.5 percentage point rate reduction) this month has risen.
According to the July Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor on the 4th (local time), the number of job openings stood at 7.673 million. This not only fell short of the market forecast of 8.09 million but also decreased by 237,000 from the previous month’s figure of 7.91 million. It is also the lowest level in three years and six months since January 2021.
By industry, job openings decreased in healthcare and social assistance (down 187,000), state and local government excluding education (down 101,000), and transportation, warehousing, and utilities (down 88,000). Conversely, job openings increased in professional and business services (up 178,000) and other services (up 51,000).
While hiring increased, layoffs also rose. Hires totaled 5.521 million, an increase of 273,000 from the previous month. The hiring rate rose from 3.3% in the prior month to 3.5%. Separations increased by 336,000 to 5.42 million, with the separation rate rising 0.2 percentage points to 3.4% over the same period. Among these, voluntary quits rose by 63,000 to 3.277 million, while involuntary separations, meaning layoffs, increased by 202,000 to 1.762 million. Notably, layoffs reached their highest level in one year and four months since March 2023.
The number of job openings per unemployed person was 1.1, marking the lowest level in three years. Compared to the peak of 2.0 in 2022, this figure has dropped by half.
The decline in job openings aligns with the recent trend of cooling labor market indicators. It suggests that employment growth is slowing and unemployment is rising, making it more difficult for job seekers to find positions. Jerome Powell, Chair of the Federal Reserve, along with other monetary policy officials, has clearly indicated that they do not want further cooling of the labor market.
Due to the slowdown in employment indicators, expectations for a big cut in September have increased. Currently, the interest rate futures market reflects a 55% chance that the Fed will cut rates by 0.25 percentage points at the September meeting and a 45% chance of a 0.5 percentage point cut. The probability of a big cut has risen 7 percentage points from 38% the previous day. Treasury yields are falling sharply. The yield on the 2-year U.S. Treasury note dropped 12 basis points (1 bp = 0.01 percentage points) to 3.76%, while the 10-year U.S. Treasury note, a global benchmark for bond yields, fell 8 basis points to 3.75% compared to the previous trading day.
Stuart Paul, an economist at Bloomberg Economics, analyzed, "The decrease in job openings is causing layoffs and unemployment to rise," adding, "The balance between labor supply and demand is being disrupted, making the labor market more vulnerable."
A more accurate picture of the U.S. labor market is expected to be revealed in the August nonfarm payroll report to be released by the U.S. Department of Labor on the 6th. Experts predict that nonfarm payrolls increased by 165,000 last month and that the unemployment rate stood at 4.2%. If nonfarm payrolls fall below 100,000 or the unemployment rate rises above 4.4-4.5%, it is expected that the Fed will implement a big cut in September.
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