U.S. job openings fell to the lowest level since 2021, a further sign that the labor market is losing momentum but not enough to prompt the Federal Reserve to consider a big interest rate cut this month.
The number of job openings, a measure of labor demand, fell by 237,000 to 7.673 million at the end of July, the lowest level since January 2021, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey (JOLTS) report released Wednesday.
The June data was revised down to 7.91 million unfilled positions from the previously reported 8.184 million.
Economists polled by Reuters had expected 8.1 million job openings in July. Hiring rose by 273,000 to 5.5 million. Layings remained low, rising by 202,000 to 1.762 million.
The job market has cooled significantly since the beginning of the year, when there were 8.8 million job openings in January.
Still, Wednesday's data suggests the labor market is slowing in an orderly manner, rather than a sudden drop, which will reduce the need for the Fed to cut interest rates by half a percentage point at its Sept. 17-18 policy meeting.
The number of people who left their jobs increased slightly to about 3.3 million.
Job turnover is seen as a gauge of the health of the job market, and workers usually leave when they already have a new job lined up or are confident they can find a new one.
Economists' consensus estimate is for employers to have added 163,000 jobs in August, causing the unemployment rate to fall to 4.2% from 4.3%.
“The good news is there are still 1.1 job openings for every unemployed person,” Ted Jenkin, co-founder of Atlanta-based consulting firm Oxygen Financial, told The Washington Post.
But Jenkin said the trend should continue to encourage the Fed to begin steadily lowering interest rates over the next year, because “the Fed doesn't want to see unemployment hit 5 percent while inflation is slowing.”
Federal Reserve Chairman Jerome Powell signaled his intention to lower the benchmark interest rate from the current 5.25% to 5.50% range that the central bank has maintained for more than a year.
The market sees a 61% chance of the central bank cutting rates by 25 basis points, according to CME Group's FedWatch tool, while the chance of a 50-basis-point cut has risen to 39% from about 31% a day earlier after Wall Street sold off after weak manufacturing data.
The Fed is trying to achieve what's known as a “soft landing,” in which economic growth slows gradually, inflation returns to its 2% target and unemployment doesn't rise sharply.
St. Louis-based labor relations expert Jason Greer told The Post that while the economy is relatively strong, “it hasn't yet convinced employers that a recession isn't just around the corner.”
“Concerns over a potential economic downturn have caused companies to cut back on hiring and other spending.”
Last month, the government reported a sharp slowdown in hiring, with payroll growth slowing to just 114,000 in July, well below expectations and the second-lowest figure in three years.
The unemployment rate also rose for the fourth consecutive month.
The July data prompted a big sell-off on Wall Street as investors worried the economy was heading toward recession.
However, markets recovered as inflation continued to show signs of slowing.
Speaking at the annual economic symposium in Jackson Hole, Wyoming, last month, Chairman Powell said hiring is “fairly weak” and that the Fed “does not seek or welcome a further cooling” in the job market.
Economists saw those comments as evidence the Fed could accelerate interest rate cuts if it deems it necessary to offset slowing employment.
