Job openings in the U.S. dropped to their lowest level in 3.5 years in July, signaling a cooling labor market. However, the decline is likely not significant enough for the
Federal Reserve to consider a substantial interest rate cut in its upcoming meeting.
According to the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics, job openings fell by 237,000 to 7.673 million at the end of July, marking the lowest level since January 2021. Additionally, June's data was revised downward to 7.910 million unfilled positions, compared to the previously reported 8.184 million.
Economists surveyed by Reuters had anticipated 8.100 million job openings. Despite the decline, hires rose by 273,000 to 5.521 million, while layoffs increased by 202,000 to 1.762 million, still considered relatively low.
The data indicates that while the labor market is slowing, it remains relatively stable. This tempered slowdown reduces the likelihood of the Federal Reserve enacting a large 50-basis-point interest rate cut at its September 17-18 policy meeting.
The possibility of a half-percentage-point rate cut is further diminished by strong consumer spending in July. However, a rise in the unemployment rate to 4.3%—the highest in nearly three years—has sparked concerns of a potential recession. Financial markets were also rattled by the government's estimate last month that job gains were overstated by an average of 68,000 per month for the 12 months leading up to March.
Despite these developments, economists caution against interpreting the data as a sign of major trouble in the labor market. They argue that an increase in immigration likely contributed to the rise in the unemployment rate. Additionally, they note that the government's payroll benchmark revisions do not account for undocumented immigrants, a group believed to have significantly bolstered job growth last year. Photo by Phil Whitehouse, Wikimedia commons.
