Weakest Job Openings Since January ‘21 — Evening Brief – 09.04.24 

The number of job openings dropped to 7.673 million in July – the lowest since January 2021 – from a revised June figure of 7.910 million from 8.184 million, according to the U.S. Department of Labor’s highly watched Job Openings and Labor Turnover Survey (JOLTS).  

In addition, the ratio of job openings to unemployed workers dipped below its 2019 average to 1.07, a decline from 1.16 in June and the lowest level since May 2021. Job openings are still up 7% from their levels seen in January 2020; however, the decline below 8 million should raise more red flags about the cooling labor market. 

While the job openings level decreased, layoffs increased to 1.76 million, up 202,000 from June. The number of new hires also increased, reaching 273,000 for the month and bringing the rate to 3.5%, which is 0.2 percentage points more than it was in June. The increase, on the other hand, is most likely a rebound from the low level that was recorded in June. 

Over time, these metrics have been below pre-pandemic levels and are still trending downward. The July hiring rate is comparable to the level reached more than a decade ago, when the job market was still rebounding from the Great Recession. The low level of layoffs may alleviate some fears, but unemployment may continue to rise if hiring remains low. 

The FOMC has suggested that it has turned its focus away from inflation and onto the soundness of the labor market. Given the notable weakness in various labor metrics of late, Federal Reserve Chair Jay Powell is widely expected to loosen monetary policy at the September 18 meeting.  

The fed funds futures market currently indicates a 47% probability of a 50-basis point interest rate cut, up from 39% after the release of weak manufacturing data on Tuesday.