Job openings drop more than expected in July to 2-year low
US job openings fall to lowest level since March 2021 amid Fed's inflation fight
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U.S. job openings tumbled in July to the lowest level in more than two years, the latest evidence that the Federal Reserve's interest-rate hike campaign is continuing to cool the once red-hot labor market.
The Labor Department said Tuesday there were 8.8 million job openings in July, a decline from the 9.1 million openings reported the previous month. Economists surveyed by Refinitiv expected a reading of 9.46 million.
It marked the lowest level for job openings since March 2021.
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Attendees at a career fair at a community college in Bolivia, North Carolina, April 20, 2023. (Photographer: Allison Joyce/Bloomberg via Getty Images / Getty Images)
Still, job openings remain historically high. Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million. There are roughly 1.5 jobs per unemployed American.
The Federal Reserve closely watches these figures as it tries to gauge labor market tightness and wrestle inflation under control. Although the figure came in lower than expected, it still indicates that demand for employees still outpaces the supply of available workers.
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The central bank has responded to the inflation crisis and the extremely tight labor market by raising interest rates at the fastest pace in decades. Officials have so far approved 11 rate hikes, lifting the federal benchmark funds rate to the highest level since 2001. Policymakers have signaled that additional rate hikes are on the table if economic data points to a resurgence in price pressures.
However, the latest jobs data could give policymakers more space to hold rates steady.
Job seekers visit booths during the Spring Job Fair at the Las Vegas Convention Center on April 15, 2022. (K.M. Cannon/Las Vegas Review-Journal / Getty Images)
"Cooling the demand for labor has been one of the Fed’s top priorities since it began its rate hike campaign last year," said Tuan Nguyen, an economist at RSM. "Although vacancies remained above the pre-pandemic level, the rapid unwinding of labor demand should add more reasons for the Fed to consider holding rates at the current rate until the end of the cycle."
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The number of Americans quitting their jobs, meanwhile, fell to 3.5 million, or roughly 2.3% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.
Switching jobs has been a windfall for many workers over the past year: Job-switchers saw their real hourly wage increase 6.4% in July, compared with a 5.4% pay increase for workers who stayed in the same job, according to recent Atlanta Fed data.