By Laura Bratton
There are more unemployed Americans than open jobs for the first time since 2021, according to government data released Wednesday.
The latest JOLTS report from the Bureau of Labor Statistics showed that the ratio of job vacancies to unemployed workers fell below 1 to 0.99 in July, the lowest since April 2021, when the ratio was 0.96.
“Unemployed workers are staying out of work for longer, even as layoffs remain low,” Indeed economist Allison Shrivastava told Yahoo Finance in an email. “This suggests the shift is less about an increase in people losing jobs and more about a decline in job openings.”
“In other words, the challenge right now lies less in job security for those already employed and more in the difficulty of reentering the labor market once you’re out of it,” she said.
Job openings totaled 7.18 million for the month. That figure was below the 7.38 million expected by economists tracked by Bloomberg and the 7.36 million vacancies in June.
That decline in job openings sent investor bets on an interest rate cut from the Federal Reserve in September higher. Traders were pricing in a 95.6% chance of a rate cut on Wednesday, up from 91.7% earlier in the morning, according to CME FedWatch.
Wall Street economists said, however, that Wednesday’s data didn’t necessarily signal a recession ahead.
RSM economist Tuan Nguyen wrote of the JOLTS report: “While the labor market is slowing substantially from its peak, there are few signs of an imminent downturn. In fact, when looking at job openings alongside the unemployment rate and payroll gains, conditions appear close to the long-term, non-inflationary level the Fed has aimed for.”
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Meanwhile, Bank of America senior economist Aditya Bhave noted that labor supply, measured by labor force participation, has weakened in tandem with labor demand. Labor force participation in July fell to its lowest level since November 2022, which Bhave said was likely aided by the United States’ aging population and the Trump administration’s controversial immigration policies.
“I wouldn’t say this is an outright weak labor market, because again, to the extent that the supply of workers has also cooled off, that’s actually helpful for the workers that are still trying to find jobs,” he told Yahoo Finance.
Bhave also said that the ratio of job vacancies to unemployed workers has been steadily falling rather than sharply declining, a good sign for the economy.
“The labor market has been cooling over the course of this year. It doesn’t seem to be cooling in the manner of a recession, which would be typically very nonlinear. It would happen all at once,” he said.
He added that the most crucial labor market data to be factored into the Fed’s next rate cut decision is still ahead: the August jobs report, slated for release on Friday.
Bhave said that given the lower-than-forecast job openings in July, it would take an especially strong August jobs report for the Fed to justify holding interest rates steady at its next meeting.
This post was originally published on Basic Income Today.