July JOLTS: Cooling Labor Market and Improving Economy

by Olevia Sharbaugh Starkey, Economist at Dodge Construction Network

The Bureau of Labor Statistics’ US job openings data for July helps further the narrative that the labor market has begun to cool down. From June to July there was a decrease in total job openings of 338,000 (from a revised 9.17 million to 8.83 million, seasonally adjusted), representing the lowest level of total job openings in the US since March 2021. The construction sector saw a decrease in openings by 23,000 from June’s revised estimate, bringing the total openings for the industry to 363,000 as recorded on the last business day of July. This represents a 6% decline in job openings from last month but a 2.8% increase from July 2022, indicating that levels may still be a bit higher than the historical norm.

For nearly all other data elements the construction sector experienced month over month increases: hires increased 3.7% (+14,000), quits increased 3.9% (+7,000), and layoffs/discharges increased a substantial 40.2% (+49,000). The US job market, as a whole, experienced declines in each of these categories except for layoffs and discharges, which posted an increase of less than 1%. Though it may be tedious to keep reiterating that the negative numbers indicate positive movement for the health of the economy in the future, it is still the truth. These declines in new job postings indicate that the demand for labor is decreasing, which should relieve stress on wage increases. As a result, companies will not need to continue raising prices to support the rising cost of labor, therefore, inflation will have more room to come down as well.

This is a very dynamic situation with many different contributing factors, so promising movement in the labor market will not be the only change needed for inflation to continue to come down. However, it is a great indication that the US economy is getting back on track.

JOLTSGraph 8.29

Data Source: https://www.bls.gov/jlt/