U.S. JOLTS job openings for July fell below expectations for the second consecutive month

After five consecutive months of outperforming expectations (including two large beats in April and May, and never missing expectations since 2025), last month's JOLTS report came as an unexpected disappointment. Today, the latest US job openings data missed market expectations for the second month in a row.

The US Bureau of Labor Statistics reported on Tuesday that job openings in July rose to 7.27 million, higher than the revised 7.18 million in June, but slightly below the market expectation of 7.31 million.

It is worth noting that the June data was significantly revised downward by nearly 200,000, from 7.359 million to 7.182 million, marking the largest negative revision since 2025.

Meanwhile, layoffs fell to the lowest level since January this year, suggesting that while companies remain cautious about expansion, there is no sign of large-scale staff reductions.

Before the release of these figures, Federal Reserve Chair Waller stated in his August 28 Jackson Hole speech that the current labor market is "quite stable" and "consistent with full employment," noting that the low employee turnover is partly due to large-scale rematching between employers and employees after the pandemic.

This Friday’s upcoming nonfarm payrolls report will provide further reference. Economists expect 55,000 new jobs to be added in August, compared to a net decrease of 23,000 in July.

The month-on-month increase in job openings in July was mainly driven by the manufacturing sector, state and local government (excluding education), and the healthcare and social assistance industries.

In particular, job openings in manufacturing rose to the highest level since December 2023, and vacancies in construction reached a new high since August 2024.

Job openings in government surged again, rising from 762,000 to 810,000 and returning to the highest level in the past year.

Nevertheless, the overall scale of job openings remains relatively subdued, reflecting employers’ caution in expanding hiring amid geopolitical uncertainty and persistent inflation.

Layoffs in July fell to their lowest since January, indicating that despite high-profile layoff announcements from companies like Visa, Uber Technologies, and Microsoft, there is no widespread wave of layoffs. The consistently low number of initial jobless claims confirms this.

The report shows that in July, there were about 1.1 job openings for every unemployed person. This ratio peaked at 2-to-1 in 2022 before steadily retreating and is now approaching its historical normal range.

This indicator is frequently cited by Federal Reserve officials to assess the balance of labor supply and demand.

In his Jackson Hole speech, Waller attributed the current low turnover rate to structural adjustments involving “large-scale rematching” between employers and employees after the pandemic, suggesting that current market conditions may be persistent rather than temporary fluctuations.

The nonfarm payrolls report for August, to be released this Friday, will be a critical juncture for assessing labor market trends. Economists expect an increase of 55,000 jobs in August, a clear rebound from July’s net decrease of 23,000.

This nonfarm payrolls data, along with the job openings report, will form an important basis for the Federal Reserve’s assessment of the labor market ahead of its September policy meeting.

The current pattern of low hiring and low layoffs suggests that while the labor market is lacking vitality, there are no substantial signs of deterioration yet.