U.S. JOLTS Job Openings Slid Further in July

The U.S. labor market exhibited more signs of softening in July as the number of job openings fell 3.7% m/m (-22.4% y/y) to 8.827 million, their sixth monthly decline in the past seven months, on top of a downwardly revised 4.7% m/m drop in June (initially reported as -0.4% m/m) according to the Job Opening and Labor Turnover Survey (JOLTS). This is the lowest reading on openings since March 2021. The decline was larger than market expectations, which had looked for little change in openings in July. The job openings rate fell to 5.3% in July, its third consecutive monthly decline, from a downwardly revised 5.5% in June (previously 5.8%). This was the lowest since February 2021. This rate is job openings as a percent of total nonfarm employment plus openings.

The excess of openings over the number unemployed fell to 2.986 million in July, its lowest since August 2021, from 3.208 million in June. This figure is on a general downtrend, indicating some incremental softening in labor-market conditions. However, it remains well above the 1.380 million peak prior to the pandemic. So, the labor market, while on a softening trend, remains tight by historical standards.

Private sector openings declined 2.3% m/m to 7.866 million, their lowest since March 2021, after an 8.6% monthly decline in May and a 5.3% monthly drop in June. The July decrease was led by declines in professional and business services, education and health services, and in “other” services. Openings rose in trade and transportation, information, and financial activities.

Total new hires fell 2.8% m/m in July to 5.773 million from a slightly upwardly revised 5.940 million in June (previously 5.905 million). This was their fourth monthly decline in the past six months. New hiring has been on a downtrend over the past year and a half but remains at a monthly pace that is slightly faster than immediately prior to the pandemic. The hiring rate edged down to 3.7% in July, its lowest since just before the pandemic, from 3.8% in June. Hiring fell in both the private and government sectors.

Total separations fell 3.7% m/m (-208,000) in July, their third monthly decline in the past four months. This reflected a 253,000 decline in quits, a 4,000 increase in layoffs and a 39,000 gain in other separations. Total separations fell in the private sector in June but rose in the government sector. The total separation rate declined to 3.5% in July, the lowest reading since August 2020, from 3.6% in June. Quits are generally voluntary separations initiated by the employee. Therefore, quits can serve as a measure of workers’ willingness or ability to leave jobs. By contrast, layoffs and discharges are involuntary separations initiated by the employer. Quits are now exhibiting a clear downtrend while layoffs and discharges have been relatively flat over the past few months after rising earlier this year. Both provide some indication of slightly softer labor-market conditions.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s USECON database.