US Job Openings Edge Up in July, but Hiring Slows
US job openings rose in July, driven by manufacturing, but hiring fell, indicating a steady labor market as the Fed weighs rate action.
The US labor market showed a mixed picture in July, with job openings ticking up while hiring lost momentum. Data from the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday showed unfilled positions increased by 89,000 to 7.271 million by the end of July. This followed a sharp downward revision for June, which now stands at 7.182 million openings instead of the initially reported 7.359 million.
The increase was largely powered by a surge in manufacturing vacancies, which rose by 79,000, almost entirely in durable goods industries. The professional and business services sector also added 65,000 openings. The overall job openings rate edged up to 4.4% from 4.3% in June.
However, hiring weakened during the month. Total hires dropped by 278,000 to 5.054 million, with the professional and business services sector accounting for a decline of 188,000. The hires rate fell to 3.2% from 3.4% in June. Layoffs and discharges, meanwhile, decreased by 119,000 to 1.666 million, with the rate easing to 1.0%.
Economists note that historically low layoffs have been a key driver of employment gains this year. The report suggests a labor market that remains stable but is not accelerating, a scenario that could allow the Federal Reserve to maintain its focus on inflation. Fed Chairman Kevin Warsh indicated on Friday that the central bank will have work to do if policymakers lack confidence that inflation is moving toward the 2% target.
Market expectations currently place a roughly 66% probability on a 25-basis-point rate hike at the Fed's September 15-16 meeting. The benchmark overnight interest rate remains in the 3.50%-3.75% range.
Some economists caution that the JOLTS survey's response rate has fallen to just above 30% from around 58% before the pandemic, suggesting the data should be interpreted with care. All eyes now turn to the government's employment report for August, due Friday, which is expected to show a rebound in nonfarm payrolls after a surprise decline in July.