Employers posted fewer job openings during the summer

September 17, 2024

Total job openings in the United States continued their downward trend in July, reaching 7.7 million. That is one million fewer openings than January; it is the lowest number since January 2021.

In most states though, job openings changed little. Virginia posted the largest month-over-month increase of 28,000 total openings but they are basically flat since January. The largest declines occurred in New York (-91,000), Minnesota (-41,000) and Massachusetts (-37,000). Openings in those three states are all down year-to-date.

Real-time data from Indeed show that job postings in several large states are plateauing at levels above the pre-pandemic trend. These include Florida, Ohio, Texas and Georgia. Postings are below trend in California and New York, but they have been increasing since late May. The fact that postings have remained steady suggests that the labor market continued to cool but not dramatically in late July.

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by Federal Reserve officials, dropped to 1.1 in July. That is below the pre-pandemic benchmark of 1.2. The ratio dropped month-over-month from 1.7 to 1.3 in Massachusetts and from 1.2 to 1.0 in New York. That was driven by a decrease in job openings and an increase in the number of unemployed workers. Federal Reserve officials are seeking to avoid any additional decreases in the ratio in the months ahead, especially if driven by an increase in unemployment.

At the national level, the unemployment rate ticked down from 4.25 in July to 4.22 in August. That triggered the "Sahm Rule," an early recession predictor. At the state level, from July 2023 to July 2024, the unemployment rate increased in 43 states (plus Washington DC), decreased in five states and stayed flat in three states.

Similar to job openings, hires remained flat. California showed the largest gain in July with 119,000 hires. That basically reverted back to levels seen in April and May. It was the same story in Michigan and Illinois. The hires rate is still running below the pre-pandemic trend.

Weak hires have so far been offset by low numbers of layoffs. The layoffs rate started to tick up in July at the national level to 1.1 in July. There were small monthly increases in layoffs in several large states, including New York, Pennsylvania, Michigan, Georgia and Florida. Those gains are not cause for alarm yet. If they continued to trend up, that could lead to higher unemployment and a recession.

Quits changed little in most states in July. Gains in Florida (+63,000) were offset by losses in Texas (-45,000) and New York (-32,000). The declines in those two large states offer evidence of a tight labor market. Data from ADP show that the wage premium for switching jobs stayed flat in August at 7.3%. That is the lowest rate since May 2021; it aligns with the relatively low quits rates, as workers have less monetary incentive to change jobs.