(Bloomberg) -- US job openings fell in July to the lowest since the start of 2021 and layoffs rose, consistent with other signs of slowing demand for workers.
Available positions decreased to 7.67 million from a downwardly revised 7.91 million reading in the prior month, the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS, showed Wednesday. The figure was lower than all estimates in a Bloomberg survey of economists.
The decline in openings coincides with recent data that show the labor market is softening, which has raised concern among Federal Reserve officials. Job growth has been slowing, unemployment is rising and jobseekers are having greater difficulty finding work, fueling fears about a potential recession.
Policymakers have made it clear they don’t want to see further cooling in the labor market and are widely expected to start lowering interest rates at their next meeting in two weeks.
After July’s disappointing jobs figures and a large downward revision to payrolls in the past year, Fed officials and market participants are paying close attention to the August employment data due Friday — especially if another weak report could prompt an outsize rate cut.
Forecasters in a Bloomberg survey see a modest pace of hiring and the unemployment rate dropping, according to the median estimate.
Treasury yields dropped and traders bolstered bets of steep Fed rate cuts.
What Bloomberg Economics Says...
“With layoffs and unemployment increasing amid a decline in job openings, the balance of labor supply and demand is shifting to show more pronounced weakness in the labor market. Ultimately, that should allow underlying wage and inflation pressures to wane.”
— Stuart Paul. To read the full note, click here
The number of layoffs rose to 1.76 million, the highest since March 2023 and led by dismissals at leisure and hospitality firms. At the same time, hiring picked up slightly from the lowest level since April 2020.
Openings fell in health care, state and local government as well as trade and transportation.
The number of vacancies per unemployed worker, a ratio the Fed watches closely, declined to 1.1, still the lowest in three years. At its peak in 2022, the ratio was 2 to 1.
The so-called quits rate, which measures people who voluntarily leave their job, edged up to 2.1%, still near the lowest since 2020. That suggests people are less confident in their ability to find a new position than they were a couple years ago.
Some economists have questioned the reliability of the JOLTS statistics, in part because of the survey’s low response rate.
--With assistance from Chris Middleton.
(Updates market reaction, adds Bloomberg Economics comment)
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