WASHINGTON — American employers posted fewer job openings in July than the previous month, a sign that hiring could be colder in the coming months.
The Labor Department reported Wednesday that there were 7.7 million job openings in July, down from 7.9 million in June and the fewest since January 2021. Openings have fallen steadily this year, from nearly 8.8 million in January .
Layoffs rose from 1.56 million to 1.76 million, the most since March 2023, although the rate of job cuts was roughly consistent with pre-pandemic levels, when unemployment was low. Layoffs have been very low since the rapid recovery from the pandemic recession, with many employers looking to hold on to workers.
Overall, Wednesday’s report painted a mixed picture of the job market. On the positive side, the total hiring rose in July, to 5.5 million, after which it has fallen for four years less than 5.2 million in June. And the number of people out of work fell slightly, to about 3.3 million. The number of people who quit is seen as a measure of the health of the labor market: Workers usually quit when they have a new job or are confident they can find one.
Still, the retreat remains far from the peak of 4.5 million reached in 2022, when many workers move out of the workforce as the economy quickly emerges from the pandemic recession. The surge in quits at that time helped raise wage gains as companies jacked up salaries to try to find or keep employees. The current retreat rate suggests that wage increases will remain low, which will help inflation accelerate.
Stephen Stanley, an economist at Santander, noted that job vacancies in July were still around 7% above 2019 levels, while hiring was healthy.
“Labor demand is still solid, albeit moderate,” he said.
Wednesday’s figures showed that fewer companies are looking to add jobs even as new data shows that consumer spending is still strong. Last week, the government estimated that the economy grew at a healthy 3% annual rate in the April-June quarter.
In July, job openings fell sharply in health care and state and local government and also fell in warehousing and transportation. Openings rose in manufacturing and professional services and business, categories that include legal services and engineering and accounting.
Although openings have declined over the past two years, there are still about 1.1 job openings for every unemployed person, Wednesday’s report showed. This shows the economy’s continued need for workers and marks a reversal from before the pandemic, when there were more unemployed people than available.
The July report on job vacancies is the first measure this week on the health of the labor market that the Federal Reserve will monitor. If clear evidence appears that hiring is faltering, the Fed could decide at its next meeting on September 17-18 to start cutting the benchmark interest rate by a relatively aggressive half-percentage point. If rent remains too high, however, a more typical quarter-point rate cut would be easier.
On Thursday, the government will report how many workers were laid off seeking unemployment benefits last week. So far, most employers have largely retained employees, rather than implementing layoffs, although job additions have been slower than earlier this year.
On Friday, the top economic report of the week – monthly jobs data – will be released. Economists’ consensus estimate is that employers added 163,000 jobs in August and the unemployment rate fell from 4.3% to 4.2%.
Last month, the government reported that job gains fell in July to just 114,000 – fewer than expected and the second smallest number in 3 1/2 years – and the unemployment rate rose for the fourth straight time.
The numbers fueled fears that the economy was falling apart and hurt stock prices. Late last month, Fed Chairman Jerome Powell emphasized the central bank’s focus on the labor market, with inflation continuing to rise.
In a speech at the annual economic symposium in Jackson Hole, Wyoming, Powell said that hiring has “cooled significantly” and that the Fed does not “seek or welcome further cooling” in the job market. Economists saw the comments as evidence that the Fed could accelerate rate cuts if it decides it is necessary to offset a slowdown in hiring.
