Job Openings Continue to Fall as the Labor Market Slows
The number of job openings fell in July and is now more than 1 million below a year ago, the Labor Department said on Wednesday.
There are now 7.7 million open positions, a decrease of 200,000 from June’s downwardly revised 7.9 million. The largest decrease came in the health care and social assistance sectors, areas that had been adding jobs in recent months. Overall, the number of job openings has fallen by 1.1 million over the past year.
The report confirms the slowing of the labor market that has been developing this year and is part of the calculation that the Federal Reserve will use in deciding to lower interest rates in two weeks.
“We continue to see the market stabilize and return to more normal hiring patterns,” says Amy Glaser, senior vice president at Adecco. As for jobseekers, she adds, “There’s ongoing interest in flexible work schedules and there’s an uptick in youth hiring. People are less likely to job hop.”
With inflation falling in line with the Fed’s goal of a 2% annual rate, the focus is now squarely on the job market. On Friday, the all-important monthly nonfarm payrolls report for August is expected to show that around 145,000 jobs were created after July’s worse-than-expected 114,000 reading.
“Our data showed a very soft July but has shown improvement in August,” says Julia Pollak, chief economist at ZipRecruiter, adding she expects the monthly number to come in around 150,000.
Data from Paychex, a provider of human resource services to business, shows that wages also are moderating. “Hourly earnings growth (2.89%) fell below 3% for the first time since January 2021” the firm found, while earnings growth dropped to 1.91% in August.
Similarly, small business human resource technology firm Homebase said that the number of hours worked in a survey of 100,000 firms dropped 3.5% in August compared to July while headcount fell by a similar percentage.
Much of recent consumer spending has been driven by gains in income, primarily through wages, so a weakening of that could slow the economy in the coming months just as Americans are focusing on who to vote for in November.
“The August jobs report should keep the Fed on track for a 25 (point) rate cut at its September policy meeting,” said Lydia Boussour, senior economist at EY-Parthenon. She added that “job growth will likely maintain a below-trend pace over the course of the year with employers expected to add an average of 100k jobs per month throughout the remainder of the year while the unemployment rate is expected to gently rise toward 4.5% by year-end.”
Vice President Kamala Harris is hoping the economy stays in a growth mode through the upcoming election as she has made gains with voters on the issue compared to the negative assessment Americans had of the economy during much of President Joe Biden’s term. However, former President Donald Trump has attacked her economic proposals as being socialist in nature.
Harris intends to make a play for small business voters Wednesday when she visits New Hampshire with a plan to increase the amount startups can deduct from taxes to $50,000 from the current $5,000 amount. Harris has also proposed giving first-time homebuyers a $25,000 assist with their down payments as well as other policies aimed at working parents. Trump, meanwhile, is pushing expanded tax cuts and increased tariffs on foreign imports.
