July JOLTS report: the broad slowdown in the game of reverse musical chairs (in general) continues

– by a New Deal Democrat

Since the beginning of this year, I have been writing that bBecause of the pandemic, there were several million fewer people looking for work, leaving a huge number of jobs unfilled, especially amid a roughly 10% higher jump in demand. This gives employees an advantage as there are almost always higher paying jobs available for them to apply for. I have also assumed that the momentum will slow down only after some employers throw in the towel and the number of vacancies decreases significantly.

By now, it’s almost certain that openings peaked in March. So the question becomes how much do they have to cut before the reverse employment game of musical chairs stops?

This morning’s report showed job openings rose 1.8% for the first time since March to 11.239 million. They remain down -5% from March and only 4.2% higher year-on-year (lowest year-on-year reading since February 2021). Here is the 2-year trend:

Actual hiring fell -74,000 to an 11-month low of 6.382 million and is actually *down* year-over-year. The slowing trend is clear:

Both exits and total separations are also down, down -74,000 and -80,000, respectively, to 9-month lows:

The reduction in the number of voluntary departures is already clear.

Finally, layoffs and layoffs fell by -2,000 to 1,398,000, about average for the past 15 months, but 136,000 above their low in December 2021:

With the positive exception of increased vacancies, this report showed a greater slowdown in all other aspects of the labor market. I read this as a game of reverse musical chairs that is slowing down, but that the employees still have the upper hand.

Remembering that this report is for July and the August data will start with the jobs report on Friday, even though we had a big number last month, I suspect that this was an outlier and that we will see a significant slowdown in job gains in compared to earlier this year and very likely a slight increase in the unemployment rate as well as a slight slowdown in nominal wage gains.

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