U.S. job openings declined in July to a 3.5-year low, signaling easing across the labor market. However, this decline is not enough to justify a 50-basis-point interest rate cut by the Federal Reserve this month. Markets saw less than a 50 percent chance of a half-percentage-point rate reduction this month, according to the CME FedWatch Tool.
The larger-than-expected decline in U.S. job openings, revealed by the latest Job Openings and Labor Turnover Survey, meant there were 1.07 open positions for every unemployed person in July, marking the lowest rate since May 2021 and down from 1.16 in June. The vacancies-to-unemployed ratio hit just above 2.0 in 2022.
U.S. job openings fall to 7.673 million
U.S. job openings, a measure of labor demand, fell by 237,000 to 7.673 million on the last day of July, the lowest since January 2021. Data for June was revised lower to show 7.910 million unfilled positions instead of the previously reported 8.184 million.
U.S. job openings declined by 187,000 in healthcare and social assistance and decreased by 101,000 in state and local government, excluding education. These two are among a handful of sectors that have driven job growth this year.
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Hiring and layoffs rise
However, the labor market is likely not deteriorating. Another report by the Federal Reserve said that employment levels were “generally flat to up slightly in recent weeks”.
Traders are currently closely watching the labor market following four straight monthly increases in unemployment which sparked fears of a recession. Economists have kept their predictions steady for a 25-basis-point rate cut at the U.S. central bank’s September 17-18 meeting.
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