U.S. July Job Openings Hit 10-Month Low... 95% Chance of September Rate Cut

7.181 Million Job Openings in July, Below Expectations
Companies Cautious About New Hiring Amid Tariff Uncertainty
Focus Shifts to August 5 Employment Report

The number of job openings in the United States fell to its lowest level in ten months in July. As companies have become more cautious about new hiring due to the uncertainty surrounding President Donald Trump's tariff policies, signs of a slowdown in employment continue to emerge.

AFP Yonhap News

On September 3 (local time), the U.S. Department of Labor released the Job Openings and Labor Turnover Survey (JOLTs), reporting that there were 7.181 million job openings in July. This figure represents a decrease of 176,000 compared to June (7.357 million) and falls well short of the market expectation of 7.38 million. It is also the lowest level in ten months since September of last year.

By industry, the health care and social assistance sector saw a decrease of 181,000 job openings. Demand also declined in the arts, entertainment, and recreation sector (62,000), as well as in mining and logging (13,000). In contrast, job openings increased in wholesale trade (54,000), financial activities (47,000), and manufacturing (41,000).

The number of hires was 5.3 million, with a hiring rate of 3.3%. In June, there were 5.2 million hires and a hiring rate of 3.3%, indicating a similar level.

The number of separations was 5.3 million, and the separation rate was 3.3%, marking a slight increase from June (5.1 million and 3.2%, respectively). Of these, voluntary quits accounted for 3.2 million (quit rate 2.0%), while involuntary separations, meaning layoffs, were 1.8 million (1.1%), both showing little change from the previous month.

The main reason for the unexpectedly sharp decline in job openings in July is President Trump's aggressive tariff policies. Analysts suggest that companies are postponing hiring as they assess the economic impact of the tariffs.

With continued signs of a slowdown in the labor market, expectations for a rate cut this month are rising further. According to CME FedWatch, as of this day, the federal funds futures market is pricing in a more than 95% probability that the Federal Reserve will lower the current interest rate of 4.25% to 4.5% by 0.25 percentage points at the upcoming Federal Open Market Committee (FOMC) meeting on the 17th.

Christopher Waller, a Federal Reserve Governor and a potential candidate for the next Fed Chair, said in an interview with CNBC that "when the labor market starts to deteriorate, it worsens quickly," and added, "We should begin cutting rates at the next meeting." He also noted, "The current rate is 1.0 to 1.5 percentage points above the neutral level," and predicted, "There could be several rate cuts over the next three to six months."

The most important indicator for assessing labor market trends will be the August employment report, scheduled for release on the 5th. The market expects nonfarm payrolls to increase slightly to 75,000 in August, up from 73,000 in July. However, with job growth remaining below 100,000 for four consecutive months, this would mark the weakest trend since the COVID-19 pandemic in 2020. Previously, the Department of Labor revised down the initial estimates for new jobs in May and June by about 130,000, to 19,000 and 14,000 respectively, raising concerns that the pace of the employment slowdown is faster than anticipated. The unemployment rate for August is expected to rise to 4.3%, up from 4.2% in July.