There's new evidence the job market is softening
Add Axios as your preferred source to
see more of our stories on Google.
On the surface, the latest data on job openings, hirings and firings points to a steady-as-she-goes labor market. Beneath that surface, it shows a job market with widening cracks.
Why it matters: Wednesday's release adds to the evidence that the labor market could use some help, as the Federal Reserve weighs an interest rate cut on Sept. 17.
- Revisions to June numbers pointed to much higher rates of firings and discharges than first reported, matching a pattern of negative revisions seen in job growth data.
- In July, the number of unemployed people surpassed the number of job openings for the first time in four years.
Driving the news: The number of job openings fell by 176,000 in July and the rate ticked down to 4.3%, matching its lowest since mid-2020.
- At the height of the post-pandemic job market boom, in the spring of 2022, there were more than 2 job openings for every unemployed person. As of July, that ratio has fallen to 0.99.
- "This is yet another data point underscoring how this job market is frozen and it's difficult for anyone to get a job right now," wrote Heather Long, chief economist at Navy Federal Credit Union, in a note.
By the numbers: Other key data points in the Job Openings and Labor Turnover Survey were of the nothing-to-see-here variety. The hiring rate was stable, as were the rates at which people voluntarily quit their jobs and were discharged or laid off.
- There were, however, sharp negative revisions to June numbers, particularly in layoffs and discharges.
- The number of job openings in June was revised down by 80,000, and the number of people who lost their jobs involuntarily that month was revised up by a whopping 192,000 from the earlier estimate.
The intrigue: The July jobs report published in early August also showed huge negative revisions to payroll employment for May and June.
- That the pattern has repeated in JOLTS implies that employers who submit their survey responses to the Bureau of Labor Statistics promptly are doing fine, but that those who submit surveys late — and thus are only incorporated in revisions — are flashing signs of weakness.
Of note: There was a particularly steep drop in the number of job openings in health care, which has been an outsized contributor to overall job creation in recent years.
- The job openings rate in health care and social assistance was 5.1% in July, down from 5.8% in June and 6.3% a year earlier.
Between the lines: This all adds up to ammunition for monetary doves on the Fed's policy-setting committee who believe that the labor market has more underlying weakness than the headline unemployment rate — a still-low 4.2% — would suggest.
What's next: Friday brings the August employment report, which takes on outsized importance at this delicate policy juncture. Will it affirm the weak job growth reported for June and July or revise it away?
- Key inflation data then arrives next week, in advance of the Fed meeting.
