By Bryan Jung
Job openings in the United States have fallen below 9 million for the first time in over two years, shrinking for the third consecutive month.
A smaller number of workers quit their jobs in July, as businesses hired fewer workers and layoffs rose slightly, as the tight employment market cooled off, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report.
The news has raised expectations that the Federal Reserve will keep interest rates unchanged in September.
A separate survey from the Conference Board on Aug. 28 revealed that consumer perceptions on the labor market appeared to cool down in August, a sign that caution is growing among Americans.
The Bureau of Labor Statistics reported that available jobs fell to a seasonally adjusted 8.827 million in July, from 9.165 million in June, after falling 338,000.
The job openings rate fell to 5.3 percent last month from 5.5 percent in June.
The massive drop is in contrast to earlier estimates from economists polled by Reuters, who had predicted 9.465 million job openings in July.
Still labor market conditions remain tight, with the lowest number of total openings since March 2021 and 1.5 job openings for each unemployed person last month.
According to the JOLTS report, openings fell across most major industries, but picked up in information, transportation, warehousing, and utilities.
Unfilled jobs increased 101,000 in the information sector, where there was an increase of 75,000 open positions in transportation, warehousing, and utilities.
Most of the losses were in the white collar and services sector, where job openings tumbled 198,000.
There were also 130,000 fewer open positions in the health care and social assistance industries.
Available state and local government jobs fell 62,000, excluding education, while there were 27,000 fewer vacancies in the federal government.
“A lot of people were discouraged by the JOLTS report because it was lower than expected at 8.8 million open jobs in our economy. But I was actually encouraged despite the headline number being down,” RedBalloon CEO Andrew Crapuchettes told The Epoch Times in a statement.
“This is due, in large part, to the decrease in demand for government jobs,” he said.
He noted that small businesses are continuing to hire at a good pace, according to the JOLTS data, calling 2023 “the year of the small business.”
“Whereas the private sector is actually hiring more quickly, particularly small businesses saw the largest increase in hiring. Job openings at businesses with one to nine employees increased from 1.3 million to 1.9 million month over month, and openings increased at businesses with 10 to 49 employees from 2.3 million to 2.5 million,” Mr. Crapuchettes said.
“Combined between the two sectors, they grew by 800,000 jobs to almost 4.5 million jobs, which is more than half the job demand in all of the private sector.”
“Another interesting trend we see from this report is the increase in demand for blue-collar jobs. We’re seeing businesses who have concerns some geopolitical situations that are happening in Asia and Ukraine, so they’re working to vertically integrate their supply chain at home so as not be reliant on those countries,” he added.
“Overall, we have an increase in blue-collar jobs, we have an increase in small business jobs, and we have a decrease in government jobs. That sounds like a great JOLTS report to me.”
Labor Market Remains Strong
However, the labor market remains strong, despite the Fed hiking interest rates to 5.25 percent, the 10th consecutive increase since March 2022, partially owing to a crucial need to fill positions in the wake of the COVID-19 pandemic.
The JOLTS report last month showed that the number of new hires dropped to 5.773 million from 5.94 million, while the hiring rate dipped to 3.7 percent from 3.8 percent in June.
Resignations fell 253,000 to 3.549 million, the lowest level since February 2021, which is a good sign for the Fed, as job hopping leads to wage inflation.
The quits rate, one of the measures of labor market confidence, fell to 2.3 percent in July from 2.4 percent in June, to 3.549 million.
Liz Young, head of investment strategy at SoFi, said on X, formerly known as Twitter, that the drop in the base rate put it “firmly back to the pre-pandemic baseline. This has historically led the Atlanta Fed Wage Growth Tracker by ~9mos, and suggests wage deceleration ahead.”
Layoffs also remain very low by historical standards, remaining little changed in July, at 1.555 million from 1.551 million.
Figures were 17 percent below what they were before the pandemic in July, while the “labor leverage ratio” of quits versus discharges was 29 percent higher, wrote Julia Pollak, chief economist for ZipRecruiter, in a statement.
She said there were currently 3 million more openings in the United States than unemployed workers.
The relatively unchanged layoff figures also showed little runoff from the massive layoffs that hit the technology and media sectors over the past year.
Companies have been reluctant to lay off workers after having a hard time finding labor after the end of the lockdowns.
The unemployment rate was at 3.5 percent as of July, close to levels last seen more than 50 years ago.
The jobless rate may increase this month, according to the Conference Board’s labor market differential, which is derived from data on respondents’ views on whether jobs are plentiful or hard to get.
The unemployment estimates narrowed to 26.2 percent in August, from 32.4 percent in the previous month, which correlates to the level seen in the Labor Department’s employment report.
A Good Sign for the Fed
All of this news is good for the policymakers at the Fed, who have been hoping for a slowdown in the labor market in their attempt to curb inflation to its target rate of 2 percent.
Officials at the central bank were concerned that a lopsided balance between demand for workers and available positions would cause wages to rise and put upward pressure on inflation.
The Fed is attempting to control inflation by raising interest rates in an effort to shrink demand.
Fed Chair Jerome Powell said at the annual Jackson Hole Economic Policy Symposium on Aug. 25 that the central bank “will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”
Economists expect that the Fed will leave interest rates unchanged at its next policy meeting from Sept. 19 to Sept. 20, according to the CME Group’s FedWatch Tool.
Meanwhile, analysts are awaiting the Commerce Department’s Personal Consumption Expenditures index on Aug. 30, the Fed’s preferred inflation and consumer spending gauge.
The Labor Department’s jobs report for August will also be published on Sept. 1.
Reuters contributed to this report.