US job openings dropped to their lowest level since 2021 in a further sign the labor market was losing steam — but probably not enough for the Federal Reserve to consider a jumbo interest rate cut this month.
Job openings, a measure of labor demand, fell by 237,000 to 7.673 million on the last day of July, the fewest vacancies since January 2021, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday.
Data for June was revised lower to show 7.91 million unfilled positions instead of the previously reported 8.184 million.
Economists polled by Reuters had forecast 8.1 million job openings in July. Hires increased by 273,000 to 5.5 million. Layoffs rose 202,000 to a still-low 1.762 million.
The job market has cooled considerably since the start of the year, when the number of openings numbered 8.8 million in January.
Still, Wednesday’s data suggests that the labor market is not cratering, but slowing in an orderly manner, which would reduce the need for the Fed to deliver a half-percentage-point interest rate cut at the central bank’s Sept. 17-18 policy meeting.
The number of people who quit their jobs ticked up slightly, to about 3.3 million.
The number of quits is seen as a measure of the job market’s health: Workers typically quit when they already have a new job or when they’re confident they can find one.
The consensus estimate of economists is that employers added 163,000 jobs in August and that the unemployment rate ticked down from 4.3% to 4.2%.
“The good news is that there is still 1.1 job openings for every one person that is unemployed,” Ted Jenkin, co-founder of the Atlanta-based consultancy firm oXYGen Financial, told The Post.
But this trend should continue to nudge the Fed to begin a steady decline in interest rates over the next year because “they don’t want to see the unemployment rate hit 5% while inflation is cooling,” according to Jenkin.
Fed Chair Jerome Powell has made it clear that the central bank intends to cut its benchmark interest rate from the current 5.25%-5.50% range, where it has been for more than a year.
Markets see a 61% chance of the central bank cutting interest rates by 25 basis points, according to CME Group’s FedWatch Tool, while that of a 50 bps cut has increased to 39% from around 31% a day earlier after a major Wall Street selloff on poor manufacturing data.
The Fed is trying to engineer a so-called “soft landing” for the economy in which economic growth gradually slows, inflation returns to the 2% target and unemployment does not spike.
Jason Greer, a labor relations expert based in St. Louis, told The Post that while the economy is relatively strong, “this has done little to convince employers that a recession is not waiting around the corner.”
“Their concerns about a potential recession is why companies…have cut back on spending on things such as hiring.”
Last month, the government reported a significant slowdown in hiring. Job gains slowed in July to just 114,000 — far fewer than expected and the second-smallest total in more than three years.
The unemployment rate also rose for a fourth straight month.
The July figures sparked a massive selloff on Wall Street as investors feared the economy was headed toward a recession.
But the markets recovered as inflation continued to show signs of cooling.
Last month, in a speech at an annual economic symposium in Jackson Hole, Wyoming, Powell said that hiring has “cooled considerably” and that the Fed does not “seek or welcome further cooling” in the job market.
Economists saw those comments as evidence that the Fed may accelerate its rate cuts if it decides it is needed to offset a slowdown in hiring.
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