US Job Openings Drop to 10-Month Low

The number of job vacancies declined to below 7.2 million for the first time since last September, new Bureau of Labor Statistics (BLS) data show.

According to the July Job Openings and Labor Turnover Summary (JOLTS), released on Sept. 3, job openings fell by 176,000, to 7.18 million from the downwardly revised 7.35 million in the previous month.

Economists had penciled in a reading of 7.4 million job vacancies.

The monthly drop was concentrated mainly in health care and social assistance (negative 181,000) and arts, entertainment, and recreation (negative 62,000). The number of job vacancies in the government also tumbled by 38,000.

Job quits were flat in July, totaling 3.208 million from an upwardly revised 3.209 million. The quits rate—the percentage of employees who voluntarily leave their positions during the month—was unchanged at 2 percent.

A large share of the quits were observed in professional and business services (197,000). Conversely, fewer quits were seen in construction (negative 80,000) and transportation, warehousing, and utilities (negative 49,000).

Economists pay close attention to this metric because it can indicate workers’ confidence in locating new employment.

Continuing the trend of the last several months, companies refrained from expanding personnel or laying off staff.

The BLS reported that the number of new hires was unchanged at 5.3 million, with the services sector adding 86,000 employees. The hiring rate—the percentage of total employment that represents new hires in the month—was 3.3 percent, the lowest since November. It has remained below pre-pandemic levels since June 2023.

At the same time, the number of layoffs and discharges was unchanged at 1.8 million. Terminations declined in the professional and business services sector (negative 130,000), but increased by 5,000 in the federal government.

Over the past year, companies have signaled reluctance to trim payrolls amid robust consumer demand and persistent labor shortage challenges.

Previewing the Main Event

The Bureau of Labor Statistics will release the widely anticipated August jobs report on Sept. 5.

Early estimates indicate the U.S. economy created 75,000 new jobs while the unemployment rate ticked up to 4.3 percent.

Market watchers will be closely monitoring the revisions. In the July non-farm payrolls report, the BLS revised the May and June totals by a combined 258,000, signaling looser employment conditions.

“The labor market can still be described as roughly in balance, but the downside risks have intensified and will lead to the Federal Reserve cutting interest rates at its next policy meeting,” economists at Oxford Economics said in an Aug. 25 note.

Federal Reserve Chair Jerome Powell, in his final keynote address at the central bank’s annual Jackson Hole retreat last month, called it a “curious kind of balance.”

“This unusual situation suggests that downside risks to employment are rising,” he said. “And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

For months, Fed Governor Christopher Waller warned that signs of a deteriorating labor market were forming. As a result, he supported cutting interest rates at the July policy meeting of the Federal Open Market Committee, pointing to the lag effect of monetary policy.

Michelle Bowman, the Fed vice chair for supervision, described labor conditions as becoming “less dynamic” and suggested “increasing signs of fragility.”

“The employment-to-population ratio has dropped significantly this year, businesses are reducing hiring but continue to retain their existing workers, and job gains have been centered in an unusually narrow set of industries that are less affected by the business cycle, including health care and social services,” Bowman said in an Aug. 1 statement.

Over the past six months, health care and social assistance—government-adjacent industries—have accounted for approximately 80 percent, on average, of employment growth

While inflation is one side of the institution’s dual mandate, Powell and several of his colleagues have placed a policy emphasis on maximum employment.

However, tariff-driven inflation can still have an impact on labor, according to RBC economists.

“Importers have choices to make around passing on tariff costs to consumers or ‘absorbing’ them by cutting other costs, i.e. labor. Inflation data tells us one part of that story, but job losses in trade-exposed sectors tell us the other,” they wrote in an Aug. 29 note.

In addition to JOLTS and the August jobs report, economic observers will digest three other reports on Sept. 4.

Global outplacement firm Challenger, Gray & Christmas will report planned job cuts for August. Trading Economics forecasts that the Challenger data will show 89,000 announced layoffs last month.

Payroll processor ADP, in its monthly National Employment Report, is expected to report that the private companies added 68,000 new positions.

Weekly jobless claims are anticipated to be little changed for the week ended Aug. 30.