A rare low since the pandemic! U.S. JOLTS job openings in July fell to a 10-month low

The U.S. Bureau of Labor Statistics reported on Wednesday that job vacancies in the U.S. fell to a 10-month low in July, a relatively rare reading since the pandemic, indicating a gradual weakening of hiring demand among businesses.

In July, the U.S. JOLTS job vacancies stood at 7.181 million, the lowest since September 2024, falling short of the expected 7.382 million, with the previous value revised down from 7.437 million to 7.36 million. The July JOLTS vacancies are the second time since the end of 2020 that they have fallen below the 7.2 million level. In other words, aside from a brief decline last year, the last time job vacancies were at a level like July's was during the pandemic, which caused significant upheaval in the U.S. economy and labor market.

Since hitting a record of 12.18 million in March 2022, JOLTS job vacancies have generally shown a downward trend for a considerable time due to the Federal Reserve's significant interest rate hikes leading to a slowdown in demand. Following the Fed's interest rate cuts, JOLTS data has intermittently rebounded. Overall, JOLTS job vacancy data is quite volatile, with monthly changes of up to 500,000 possible.

Economists tend to view the JOLTS report from an overall trend perspective, with job vacancies remaining relatively stable between 7 million and 8 million over the past year.

By industry, the reduction in job vacancies in July was mainly concentrated in healthcare, retail, and leisure and hospitality. Among them, the job vacancies in the healthcare sector, an important driver of employment growth this year, fell to the lowest level since 2021.

The ratio of job vacancies to unemployed persons, closely watched by Federal Reserve officials, has dropped to 1, hovering at its lowest point since 2021. At its peak in 2022, this ratio reached 2 to 1. This is a key indicator of the balance between labor supply and demand.

The JOLTS report also showed:

The number of hires rebounded by 41,000 from a year-low, reaching 5.308 million.

The number of layoffs also rose slightly, reaching the highest level since September of last year, with an increase in layoffs in the construction industry. The time it takes for unemployed individuals to find new jobs has lengthened.

The number of voluntary quits was 3.208 million, with the quit rate remaining unchanged at 2%. A higher number of voluntary quits indicates a tighter labor market, where workers feel confident leaving their current jobs for better opportunities, and vice versa.

After the release of the JOLTS data, U.S. stocks extended their gains, and U.S. Treasury yields fell:

• The Nasdaq Composite Index rose by 1.28%, while the Nasdaq 100 Index increased by 1%.
• The yield on the U.S. 10-year Treasury note briefly plunged from around 4.25%, hitting a daily low below 4.2284%, with an overall decline of about 3.2 basis points for the day. The yield on the 2-year Treasury note dropped from around 3.64% to 3.6166%, marking a new daily low, with an overall decline of about 2.3 basis points for the day. The yield on the 30-year Treasury note fell by about 1 basis point, reaching a daily low below 4.92%, with an overall decline of more than 4.7 basis points for the day.
• Spot gold's gains expanded to 0.46%, approaching the historical high of $3,561.48 set at 21:30 Beijing time when the U.S. stock market opened.
• The U.S. dollar index fell briefly, dropping over 0.1% and nearing the daily low of 98.191 points set during the European market's early session. The Bloomberg Dollar Index briefly plunged from around 1207 points, hitting a daily low close to 1204 points, with an overall decline of more than 0.2% for the day.

Media analysis suggests that the decline in job vacancies indicates that companies are becoming more cautious and selective in hiring, attempting to assess the impact of President Trump's trade policies on the economy.

Industry insiders point out that the JOLTS data highlights the rising concerns about a weakening labor market, a trend that has been evident over the past few months. Some analysts assert that this marks a turning point in the labor market, revealing a crack. More worryingly, job vacancies in the healthcare and social assistance sectors decreased in July. The data indicates that the current job market is nearly frozen, making it difficult for anyone to find work.

Federal Reserve officials are closely monitoring labor market data for signs of concerning weakness. Fed Chair Jerome Powell stated last month that the downside risks to employment are increasing. Investors generally expect the Fed to cut interest rates by 25 basis points at its policy meeting later this month.

The JOLTS report is one of the labor indicators most valued by former U.S. Treasury Secretary and former Fed Chair Janet Yellen during her tenure. This indicator is also of high interest to the Federal Reserve regarding labor market data. However, it is worth noting that some economists question the reliability of JOLTS statistics due to the current low response rate of the survey, which is about half of what it was a few years ago.

According to another daily index published by the job site Indeed, job vacancies declined in early July but rebounded by the end of the month