Human resource manager Renee Bell speaks to a job applicant at a job fair in Tupelo, Miss., Oct. 12, 2021. (AP/Rogelio V. Solis)
U.S. job openings dropped in July to their lowest level since March 2021, raising questions about the robustness of the economy and hopes that the Federal Reserve will back off its course of raising interest rates 11 times in 17 months to curb inflation.
The Bureau of Labor Statistics on Tuesday published its monthly estimate of job openings — The Job Openings and Labor Turnover Survey, or Jolts — kicking off a series of key jobs reports that could provide further clarity on the strength of the labor market and its likely impact on inflation.
The Jolts report showed that around 8.83 million jobs went unfilled in July, down from the 9.582 million in June and part of a four-month decline that started in March.
Layoffs were mostly unchanged in July at 1.6 million, suggesting that employers are retaining workers after having trouble finding labor during the pandemic, Investing.com reported.
The number of quits dropped by 253,000 to 3.5 million, a sign that employees may be becoming less confident in their ability to switch jobs fast in an uncertain economic environment.
At the Jackson Hole Economic Symposium on Friday, Federal Reserve Chairman Jerome Powell said a weakening labor market was one of several key data tests that could help avert additional interest rate hikes.
“The job market is back to normal,” Jed Graham wrote for Investor’s Business Daily. “The (Jolt) survey passed Powell’s test with flying colors, as job openings slid to the lowest level in more than two years.”
ZipRecruiter chief economist Julia Pollak said cooling economic conditions “will come as a relief to many employers … The labor market is largely back to pre-pandemic conditions.”
The Conference Board’s monthly consumer confidence survey reinforced a return to more normal conditions. The percentage of respondents who see jobs as “plentiful” fell from 43.7 percent in July to 40.3 percent in August. Those saying jobs are “hard to get” rose to 14.1 percent from 11.3 percent. The differential fell to 26.2 percent, which is 6 percentage points lower than the February 2020 reading, according to Barry Knapp of Ironsides Macroeconomics.
A strong labor market and the higher wages that generally support it have consistently worried the Fed as the broader economy continues to outperform recession forecasts, The Street reported.
Still, by one of Powell’s favorite measures, the labor market isn’t back to its pre-pandemic norm. The ratio of unemployed workers to job openings peaked at 1.2 before the pandemic. There are still 1.5 unemployed workers for every job opening, with 3 million less unemployed than job openings.
U.S. stocks surged on Tuesday after the new jobs data took some pressure off interest rates, with the S&P 500 up 1.45 percent at closing and the tech-heavy Nasdaq 100 up more than 2 percent for their best-performing day in August. The 10-year Treasury yield nosedived on Tuesday.
The August jobs report is due on Friday, and economists expect a net gain of 186,000 in August, which would be a marked slowdown from the post-pandemic job gains of 2021 and 2022 and would take even more pressure off of interest rates, Markets Insider reported.
