The latest government report indicates that US job openings and employee quits fell last month, a development that could signal a potential rate cut by the Federal Reserve this September, as articulated by BMO Capital Markets Economics. According to the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey, vacancies decreased to 8.18 million as of the end of June, down from May's revised figure of 8.23 million.
This decline was somewhat in line with the consensus estimate of approximately 8 million compiled by Bloomberg. Jennifer Lee, a Senior Economist at BMO, emphasized that this marks the third decrease in job openings within the past four months. However, she noted that the upward revision to May’s figures indicates that the decline was relatively modest, amounting to only 46,000 fewer openings in June compared to the prior month. The data reflected a broader trend, showing that total private job openings fell to 7.09 million in June, down from 7.19 million the month before.
Notably, the durable goods manufacturing sector experienced a drop of 88,000 vacancies, although there was a contrasting increase of 120,000 openings in the accommodation and food services sector—elements that point to sector-specific fluctuations in job availability. Moreover, the survey revealed that job separations, encompassing both quits and layoffs, declined from 5.4 million to 5.1 million month over month.
The report indicated a reduction in quits, falling to 3.28 million in June from 3.4 million in May, while layoffs and discharges decreased to 1.5 million from 1.68 million over the same period. Specifically, quits declined by 64,000 in the construction industry and by 48,000 within leisure and hospitality. In a separate report released on the same day, The Conference Board observed a deterioration in consumer perceptions of the job market during July.
The share of consumers who believed it was more challenging to find employment rose to 16%, marking the highest level since March 2021. Furthermore, the index measuring the current situation fell by 1.7 points to 133.6, hitting a three-year low in the context presented by BMO. As Jennifer Lee remarked, 'Potentially slower consumer spending and weaker job growth both maintain the likelihood of a September rate cut.' The financial markets overwhelmingly predict that the Federal Open Market Committee will choose not to alter interest rates in their upcoming meeting.
Meanwhile, the CME FedWatch tool reported that the probability of a 25-basis-point rate cut in September was approaching 88%, suggesting a prevailing market expectation for easing monetary policy under current economic conditions..