The U.S. job market showed signs of cooling in July as data showed that employers posted fewer vacancies than they did in the previous month.
According to the Labor Department, there were 7.7 million job vacancies in July, a decrease from 7.9 million in June. This marks the lowest level since January 2021, signaling a possible employment downturn amid increasing layoffs. Job openings have consistently decreased this year, dropping from around 8.8 million in January.
The report stated that layoffs rose from 1.56 million to 1.76 million while being roughly similar to pre-pandemic levels. Layoffs have been unusually low since the economy's rapid recovery from the pandemic recession, with many employers intent on holding onto their workers, AP reported, citing the Labor Department's Bureau of Labor Statistics' Job Openings and Labor Turnover Survey, or JOLTS report, which was released Wednesday.
According to the job market data, there were 7.910 million unfilled job positions in June, as opposed to the previously reported 8.184 million. Similarly, analysts projected 8.100 million job vacancies in July, but only 7.7 million were posted, according to a Reuters report.
Overall, Wednesday's labor department report highlighted a mixed picture of the job market. In July, total hiring rose to 5.52 million after it had dropped to a four-year low of 5.2 million in June.
As per the report, 3.3 million workers left their jobs in July in search of new opportunities. But this number is still significantly lower than 4.5 million in 2022. That was the time when several workers changed jobs as the economy came out of the pandemic recession. The increase in quits at that time led to wage gains as companies hiked pay in a bid to keep employees. As per the report, the current lower quit rate suggests that wage growth will likely remain steady, which could help cool inflation.
Stephen Stanley, an economist at Santander, noted that the job market remains robust, with July's openings 7% above pre-pandemic levels, indicating a continued strong demand for labor.
"Labor demand is still solid, albeit moderating," he said.
Jobs in manufacturing and professional services increased in July, while those in healthcare, government, and transportation declined. The labor department report says that even as openings have dropped for the past two years, there are still roughly 1.1 job openings for every unemployed person in the current labor market. This highlights the continued high demand for labor and reverses the pre-pandemic trend where jobseekers outnumbered available opportunities.
