The numbers: Job openings in the U.S. fell in July to a 28-month low of 8.8 million, as companies scale back hiring in response worries about an economic slowdown.
Job listings dropped from a revised 9.2 million June (originally 9.5 million), the Labor Department said Tuesday. It’s the fewest number of job openings since March 2021.
The number of job openings is seen as a sign of the health of the labor market and the broader U.S. economy. Economists polled by the Wall Street Journal had forecast job listings to total 9.5 million.
Job postings have dropped from a record 12 million last year partly because of a surge in hiring, but also because businesses have become more cautious amid worries about a recession.
Senior Federal Reserve officials are sure to welcome the decline in job openings and slowdown in hiring. The central bank is worried a persistently tight labor market — too many jobs and not enough workers — could keep upward pressure on wages and make it harder to tame inflation.
The number of people quitting jobs, meanwhile, sank to 3.5 million and touched the lowest level in two and a half years. People quit less often and tend to stay put when the economy weakens.
Job quitters had topped 4 million two years ago and the number only began to decline this year.
Key details: Job openings fell the most in white-collar jobs and professional businesses. They also declined for health care and government positions.
Listings rose in information services such as media as well as transportation.
While many openings are never actually filled, economists view the trend in job postings as a rough gauge of how strong the labor market is.
The number of job openings for each unemployed worker slipped to 1.5 in July, down from a peak of 2.0 in 2022. The Fed is watching the ratio closely and wants to see it fall back to prepandemic norms of around 1.2 or so.
The so-called quits rate among private-sector workers, meanwhile, fell a few ticks to 2.5% and returned to 2019 levels. It peaked at 3.3% a little over a year ago.
The number of reported layoff remained well below pre-pandemic levels, however. A chronic shortage of labor had made businesses reluctant to cut staff unless sales fizzle.
The U.S. is forecast to add a solid 170, 000 new jobs in August. The August jobs report comes out on Friday.
Big picture: The Fed has sharply raised interest rates to slow inflation, but higher borrowing costs have not depressed the economy as much as they normally do.
The economy has continued to expand at a steady pace and the number of jobs being created — though slowing — is increasing twice as fast as the Fed would like.
Yet Fed official expect hiring to continue to slow and unemployment to rise as higher rates squeeze the economy. The Fed is trying to bring the inflation rate — now running between 3% to 4% — down to pre-crisis levels of 2%.
Looking ahead: “While most Americans who want a job have one, it is not as easy to find new work as a year ago. Hires and quits are back to their pre-pandemic levels, and job openings are falling rapidly,” said chief economist Bill Adams of Comerica.
“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,” he added.
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose in Tuesday trades. The softness in the job-openings report added to the positive tenor.