The market got a jolt from the latest JOLTS (Job Openings and Labor Turnover Survey) report this week. According to the latest data from the Bureau of Labor Statistics, the number of job openings in the U.S. dropped to 7.67 million in July. That’s the lowest we’ve seen since January 2021.
Another way to look at this data is to take the number of job openings and divide it by the number of unemployed workers. This is shown in the chart above. We call this the “Job Seeker’s Ratio.” Fed Chair Jerome Powell talks about this metric often. Basically, when this metric is high, it means demand for workers is high, and when it’s low, demand for workers is low.
As you can see, this ratio slipped to 1.1 in July. That’s well off its peak of 2 from a couple of years ago—and nearly back to below a balanced 1:1 ratio.
What does this mean? Basically, it means the DJ is turning down the volume on the labor market. Think of it like a game of musical chairs. There are now fewer chairs (jobs) than before, and the number of players (job seekers) is increasing. In a nutshell, it means the labor market is cooling.
The markets didn’t take this news lightly, selling off in response to the report. Shifts from one economic phase to another often bring heightened volatility, so we should probably expect that trend to continue in the near term.
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