Clear' signs of cooling US jobs market as Fed to lower rates next week

This week’s data will have done nothing to calm concerns over the health of the US labour market. While running on somewhat of a lag, the JOLTS job openings number slumped to 7.181 million in July, well below the 7.4 million estimate and just short of its lowest level since December 2020.

Incidentally, the number of job vacancies in the US economy are now below the number of unemployed Americans for the first time since April 2021 (December 2017 once we exclude the pandemic). In other words, there are now more workings searching for employment than there are jobs available - a clear sign of labour market slack that is generally followed by weaker wage pressures and looser monetary policy.

Yesterday’s ADP employment change number, which has admittedly lost much of its correlation with the headline NFP figure in recent years, pointed to net jobs growth in the private sector of just 54k in August (below the 65k estimate). Initial jobless claims also ticked up to their highest level since June (237k).

All things considered, the signs of a cooling in US jobs market conditions are clear, and the Fed looks effectively certain to lower rates next week, even if today’s payrolls number was the print anywhere near the upper end of estimates (125k).