Job openings fall to lowest level in more than two years
Zachary Halaschak
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The number of job openings in the United States decreased to 8.8 million in July, the lowest level it has been in more than two years.
The new numbers, which look at openings across all sectors for that month, were released as part of the Job Openings and Labor Turnover Survey, which was updated by the Bureau of Labor Statistics on Tuesday. The decrease is notable and marks the lowest level of job openings since March 2021.
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The decline is also notable because most economists had expected job openings to tick up a bit in July after tumbling the month before.
“The reduction in quitting and job openings is happening at the same time as layoffs remain low,” said Indeed Hiring Lab head of economic research Nick Bunker. “The layoff rate remains unchanged over the past year and at a level that would have been an all-time low prior to the pandemic. All three of these trends are necessary ingredients for a soft landing in the U.S. labor market, but that soft landing is still not guaranteed.”
The falling number of openings is a sign that the labor market, which has held up despite a series of major threats over the past two years, might be starting to take a hit from the Federal Reserve’s interest rate hikes, which the labor market has been surprisingly resilient to.
The largest decreases in job openings were in professional and business services, healthcare and social assistance, state and local government (excluding education), and state and local government education.
About 3.5 million workers quit their jobs in June, down by 253,000 from the month before. The figure is equivalent to about 2.3% of the workforce.
The “quits rate” measures the number of people who voluntarily left their jobs and includes those who left their previous employment for another job and people who quit but are confident they will soon find new employment, given the tightness in the labor market.
Also of note in Tuesday’s JOLTS report: Layoffs and discharges were little changed at 1.6 million in June.
Still, while job openings are at their lowest level since early 2021, openings are historically high and above where they were before the pandemic, when the unemployment rate matched the ultra-low 3.5% it is at now.
The numbers come ahead of the much anticipated August employment report, which is set to be released on Friday. The economy added 187,000 jobs in July, and the unemployment rate inched down to an ultra-low 3.5%.
The strong labor market has given the Fed more ammunition to keep tightening monetary policy. Many economists had thought that the rate hikes would have caused an economic downturn in the U.S. by now, although the economy is chugging right along.
Last week, Fed Chairman Jerome Powell in his annual Jackson Hole speech warned more interest rate hikes are possible but added the central bank will “proceed carefully” when deciding its next steps. He attempted to walk a fine line between suggesting rate hikes are winding down and hinting that more are on the way in order to give the Fed flexibility.
“At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks,” Powell said. “Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”
The Fed has been raising rates to drive inflation down and the effort has been working, although inflation is still too high for the central bank’s liking, particularly core inflation, which is less volatile and strips out food and energy from the equation.
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Headline inflation, as gauged by the consumer price index, is now hovering at 3.2% — still above the Fed’s goal of 2% long-run inflation.
The Fed’s next interest rate decision will come following its meeting in late September.