Job Openings Hit Lowest Level Since 2021, Reflecting Problematic Labor Markets

The latest release of U.S. job market data offers little in the way of optimism for economists, and places more pressure on the Fed to cut rates.  

Job openings fell to 7.67 million in July, according to the month’s Job Openings and Labor Turnover Survey (JOLTS) from the U.S. Bureau of Labor Statistics — marking their lowest level since January 2021.  

The data reflects a consistently cooling labor market and only adds to worries about economic stability and the broader challenges facing the U.S. workforce and the future of work. 

CNBC reports that the drop in job openings represents a decline of 237,000 positions from June’s revised figures.  

Layoffs have also risen, reaching 1.762 million — the highest since March 2023. These numbers add to concerns about the Federal Reserve’s efforts to curb inflation through interest rate hikes, with fears that the central bank may have missed the mark in timing its policy interventions. 

A report on the data by Indeed highlights that nearly 80% of the decline in openings occurred within the Health Care and Social Assistance sectors, adding that July’s sharp drop might be inflated. This pointed decline suggests certain industries are feeling the pressure more than others. 

However, the overarching narrative remains grim, with the number of job openings now lower than pre-pandemic levels. The ratio of job openings to unemployed workers is reported to have taken a dip below the average seen in 2019.  

ADP’s recent National Employment report reveals private payrolls increased by 99,000 jobs in the month of August and annual pay was up 4.8% year-over-year. The payroll increase is the smallest since January 2021.  

These trends across the labor market may indicate a difficult path ahead, where fewer job opportunities could lead to a higher unemployment rate across the workforce. The hiring rate has bounced back modestly to 3.5%, and the quitting rate has gone up to 2.1%, but both are still lower than they were before the COVID-19 pandemic. 

 more than others. The Federal Reserve’s focus has pivoted slightly from inflation towards monitoring and stabilizing the labor market. July’s JOLTS report might accelerate the pace at which interest rates are cut to stimulate economic activity.  

Whether this data signals a temporary overstatement, or a more entrenched labor market downturn will influence the Federal Reserve’s next steps and, by extension, the stability of economic recovery efforts.