JOLTS Report: Labor Market Cooled Substantially in July
JOLTS Report: Labor Market Cooled Substantially in July
Just as the weak July Jobs Report alarmed observers and sparked a market selloff last month, the July JOLTS Report released today too shows a sharp deterioration in labor market conditions.
Economists were expecting to see the number of job openings gradually ease to 8.1 million. Instead, the prior month’s total was revised downwards to 7.9 million, and July’s tally fell below 7.7 million. Job openings are now 36% below their pandemic peak, and down 13% over the year.
There are just 1.10 job openings per unemployed person, down from a peak of 2.02 in March 2022, and below the pre-pandemic February 2020 average of 1.22. That measure was often cited by Federal Reserve Chair Jerome Powell in recent months as evidence of an unsustainably tight labor market. But it now shows a market that has slackened beyond the point of pre-pandemic normalization.
The quits rate held steady at 2.1%, below its pre-pandemic rate of 2.3%, further underscoring the labor market’s shift from the Great Resignation (with a whopping 3.0% quits rate) to the Great Stay. ZipRecruiter’s latest New Hires Survey documents some of the ways in which job switchers’ prospects have cooled in recent months—smaller pay bumps, less opportunity to negotiate offers, fewer signing bonuses, and less attractive jobs overall—so it’s not surprising that workers are choosing to stay put when they can.
Increasingly, however, staying or leaving is no longer only up to workers. Earlier in the pandemic, employee-initiated quits accounted for the vast majority—72%—of all job separations. That share has now fallen to 60%, and the monthly layoffs have reached the highest level in 16 months.
Rather than showing the labor market level off at pre-pandemic temperatures, the report suggests that the labor market is cooling, and that the pace of cooling may be accelerating. Together with slipping Jobs Report figures, sliding JOLTS Report indicators provide evidence that the labor market is no longer a source of inflationary pressure, and that the time to cut interest rates has arrived—or rather, had already arrived in July.
Take a tour through the rest of the JOLTS report in ZipRecruiter charts.
