JOLTS Jobs Resume Slowdown – USD Lower As Vacancies Fall

The U.S. dollar tumbled lower as job opportunities continued their downward trend, signaling further deterioration in the U.S. labor market. JOLTS job openings fell to their lowest level since early 2021 in July, highlighting increasing challenges in the labor market. The Federal Reserve, which had previously focused on controlling inflation, has now turned its attention to the weakening employment landscape, with Fed Chair Jerome Powell emphasizing at the Jackson Hole Symposium that the central bank does not want to see additional softness in the job market, yet the latest data suggests that labor supply is shrinking.

This development has heightened the chances of a 50 basis point rate cut in September, with current market pricing reflecting a 46% probability of a half a percentage point cut and a 54% chance of a 0.25% rate cut. Following the release of the weak jobs data, the U.S. dollar dropped sharply, shedding about 30-50 pips across various currency pairs. However, the outlook could shift further with Friday’s non-farm payroll (NFP) employment report, so the USD selling has stopped right now as traders move to the sidelines.

JOLTs Job Openings for July 2024

• Job openings 7.673M. Lowest since Feb 2021
• Prior month 8.184M (was expecting 8.000M) revised lower 7.910M
• vacancy rate 4.6% versus 4.8% last month revised from 4.9%
• Quits rate 2.1% versus 2.0% last month (revised from 2.1%).
• Separations rate 3.2% versus 3.2% last month

Details:

JOLTS Employment Report Summary for July

• Total job openings: 7.7 million, rate 4.6%
• Decreased by 1.1 million year-over-year
• Decreased in:
  • Health care and social assistance: -187,000
  • State and local government, excluding education: -101,000
  • Transportation, warehousing, and utilities: -88,000
• Increased in:
  • Professional and business services: +178,000
  • Federal government: +28,000

• Hires:

  • Total hires: 5.5 million, rate 3.5%
  • Increased in accommodation and food services: +156,000
  • Decreased in federal government: -8,000

• Total Separations: Separations are increasing

  • Total separations increased to 5.4 million (+336,000), rate 3.4%
  • Increased in health care and social assistance: +108,000

• Quits: People are not quitting

  • Total quits unchanged at 3.3 million, rate 2.1% vs 2.0% last month
  • Down by 338,000 year-over-year.
  • Increased in information: +16,000

• Layoffs and Discharges:

  • Total layoffs and discharges: 1.8 million, rate 1.1%
  • Increased in accommodation and food services: +75,000
  • Increased in finance and insurance: +21,000

• Other Separations:

  • Increased to 381,000 (+71,000)