The Number of U.S Job Openings Has Declined to 8.83 Million, the Lowest Number Since Early 2021

In July, the United States experienced a more substantial than anticipated decline in job openings, reaching a level not seen in over two years. This reduction provides fresh evidence of a cooling labor demand within the job market.

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According to the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS), the count of available positions dwindled from 9.17 million in June to 8.83 million in July. This outcome marks the sixth decrease observed within the last seven months.

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The quits rate, which measures the proportion of voluntary job departures in relation to total employment, diminished to 2.3%. This figure represents the lowest reading since the commencement of 2021 and implies a reduced confidence among Americans in their capacity to secure alternative employment within the current job market conditions.

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The reduction in job openings is chiefly attributed to declines in sectors such as professional and business services, healthcare, and government roles.

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This decline in vacancies, coupled with increased participation in the labor force, has contributed to a more balanced labor market, thereby restraining wage growth. Despite the easing demand for workers, the unemployment rate remains historically low.

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This trend has instilled growing optimism that the United States can steer clear of a recession, even amidst the Federal Reserve's assertive rate hike policies. Jerome Powell, Chair of the Federal Reserve, also indicated last week that if the labor market continues to loosen, inflation could persistently trend downward.

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Bill Adams, Chief Economist at Comerica Bank, remarked, "The Fed is concerned that rapid wage growth might stoke inflationary pressures in 2024, but wage growth is likely to slow in coming months with workers seeing fewer opportunities to raise wages by switching jobs."

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Anticipated job openings had been projected to reach 9.5 million, as per a Bloomberg economist survey. Subsequent to the release of these figures, US Treasury yields exhibited a decline, while the S&P 500 index continued its ascent.

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The ratio of job openings to unemployed individuals retreated to 1.5, reaching the lowest point since September 2021. It contrasts with the ratio's peak of 2 to 1 in 2022.

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Hiring activity has also observed a decline, marking the lowest level recorded since January 2021. Over the last two months, the number of hires has diminished by 458,000, representing the most substantial decrease since the close of 2020.

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These statistics precede the upcoming monthly jobs report scheduled for Friday, which is projected to indicate an addition of 170,000 jobs in August. This figure, combined with the preliminary benchmark revision released the prior week, underscores the gradual deceleration in hiring over the past year.

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Layoffs, on the other hand, remained relatively steady. With persistent workforce shortages and the steadfastness of American consumer sentiment, companies continue to exhibit reluctance in releasing their employees.

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Some economists have raised concerns regarding the reliability of the JOLTS data, attributing this to the survey's limited response rate. By the conclusion of 2022, this rate had decreased to approximately 31%, which is roughly half of the rate observed just three years earlier.

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Furthermore, distinct figures reported by the Conference Board on Tuesday indicated a diminished optimism among Americans concerning their prospects of securing employment. The share of respondents in that survey noting the difficulty of finding jobs reached its highest level since April 2021.

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