The Job Openings and Labor Turnover Survey (JOLTS) just released its report for August and the data is hardly encouraging. According to JOLTS:
Job openings decreased to 10.1 million on the last business day of August. Hires and total separations changed little at 6.3 million and 6.0 million, respectively.
July job openings rates decreased in 5 states and increased in 4. Hires rates decreased in 4 states and increased in 1. Total separations rates decreased in 6 states and increased in 2; quits rates decreased in 6 and increased in 5; layoffs and discharges rates increased in 6 and decreased in 4.
That drop to 10.4 million job openings is a drop of over 1.1 million, the sharpest and largest plummet since August of 2020, at which time the Covid pandemic and the government’s response to it were shredding the economy. Reuters, reporting as much and putting the 1.1 million jobs openings drop in context, noted that:
U.S. job openings fell by the most in nearly 2-1/2 years in August, though staying at high levels as demand for labor remains fairly strong, which could keep the Federal Reserve on its aggressive monetary policy tightening path.
Job openings, a measure of labor demand, dropped 1.1 million to 10.1 million on the last day of August, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday.
August’s decline was the largest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic. Data for July was revised lower to show 11.170 million job openings instead of 11.239 million as previously reported.
In other words, the labor market is cooling off, as there are fewer job openings for those who quit their jobs or are laid off/fired to seek out, dropping from nearly 2 jobs per person looking for one to 1.7. But, while not great news for the average American looking for a paycheck, it’s probably the result from Fed tightening that Jay Powell and the Fed wanted, as CNN Business reported, saying:
“The labor market is unraveling the way we wanted it to,” said Lightcast chief economist Bledi Taska. “We wanted it to go down, but hires and separations stayed the same. There’s still hope for a soft landing.”
That’s welcome news to the Federal Reserve, which wants more slack in the labor market out of concern that tight employment could push up wages and ultimately keep inflation elevated.
“Hard to read too much into one data point, but the data does offer some evidence that labor demand is cooling,” said Michael Pugliese, an economist with Wells Fargo. “Layoffs ticked higher but remain low and are still lower than the level that prevailed right before the pandemic. Overall, probably an encouraging report for monetary policymakers at the Federal Reserve.”
But while the moneymen might be pumping their fists at the result, there is still cause for concern. For one, the number means that the economy is slowing and the average worker probably won’t be enthused with hearing that the “labor market is unraveling”, even if it’s “unraveling” the way the monetary theorists wanted. Even if that means inflation might cool off, it’s not great news for people trying to get a business going or otherwise avoid a recession.
Additionally, the crash to 10.4 million openings is much larger than the general consensus about what openings would fall to, which was 10.8 million. So, that could mean that things are getting a bit out of hand and the economy is “cooling” more than the Fed and like entities want. CNN Business reported on that as well, saying:
Economists were expecting job openings to fall to just 10.8 million, according to estimates on Refinitiv. Some of the largest decreases were in sectors such as finance and insurance, educational services, manufacturing and retail — sectors that have struggled to add workers as the pandemic has waned.
The drop in available jobs is consistent with the broader economic slowdown as the Fed raises interest rates to bring down inflation…
So we’ll see what happens. Whether a net positive or net negative, what does appear to be clear is that the economy and job market are cooling.
By: Gen Z Conservative