Job Openings Down, Separations Up in July

In July, the job market showed signs of cooling, with a decrease in available job openings alongside an increase in the number of individuals exiting their positions. This shift comes as the economy grapples with the impact of persistent elevated interest rates.

The Labor Department’s latest report from the Job Openings and Labor Turnover Survey (JOLTS) revealed that job openings fell to 7.7 million, down from a revised figure of 7.9 million for June. This downward adjustment signals a concerning trend in the labor market.

On the other hand, separations, which encompass both layoffs and voluntary quits, surged by 336,000, bringing the total to 5.4 million from June’s 5.1 million. The increase in separations points to a growing sense of instability among workers.

Economic analysts expressed pessimism regarding the latest data. Mark Hamrick, an economic analyst at Bankrate, characterized the JOLTS report as another detrimental indication of the U.S. economic landscape. He noted, “Not only did the number of job openings decline month over month to nearly 7.7 million as of the end of July, but June openings were revised down by 274,000 to 7.9 million.”

The unemployment rate has been on the rise since April, climbing from near-record lows experienced earlier in the year. In July, the rate increased by 0.2 percentage points, reaching 4.3 percent—a notable increase that triggers the Sahm rule, a recognized indicator of impending recession.

As a result, the ratio of open positions to job seekers has been steadily decreasing; this ratio peaked at 2-to-1 towards the end of 2022. The decline indicates growing competition for jobs and potentially reflects a tightening labor market.

Analysts are also warning about various financial stresses consumers are facing. Mark Goosay, an executive at Principal Asset Management, remarked on the decline in consumer sentiment, suggesting that an increase in unemployment might be on the horizon. He stated, “Consumer sentiment has been waning, hinting that we’ve been overdue for an uptick in unemployment.”

Additionally, Goosay highlighted an alarming trend concerning consumer debt. “Credit card balances and delinquencies have been steadily growing since the pandemic, indicating a heightened reliance on debt by the consumer to maintain their standard of living,” he explained.

Despite the somber news, the financial markets displayed resilience on Wednesday. The Dow Jones Industrial Average rose by more than 130 points shortly after markets opened, even though there was a sharp decline the previous day due to concerns regarding manufacturing slowdowns.

As the labor market evolves amidst these pressures, both analysts and consumers remain watchful. The data reflects broader economic challenges, underscoring the importance of monitoring job availability and consumer behavior as indicators of future trends in the economy.

The combined outlook on unemployment, job separations, and consumer sentiment forms a complex picture of the current economic climate, suggesting that both businesses and individuals may need to brace for adjustments in the months ahead.