Sharp Drop in Job Openings to Lowest Since 2021

Job Openings Plunge

Following last month's JOLTS report, which showed a slight increase in job openings due to data manipulation by the Kamala Department of Labor, a significant drop was predicted for the next report. This prediction was based on the assumption that the recent surge in government job openings would be adjusted. As anticipated, the Department of Labor reported a sharp drop in job openings for July, with the number plunging to 7.673 million - the lowest since January 2021. This figure is a significant decrease from June's figure of 8.184 million, which was later revised down to 7.910 million.

Missed Estimates

The revised figure for June means that what was initially reported as a beat to estimates of an 8.00 million print has been revised to a miss of 7.910 million. As Wall Street was expecting a much higher number based on the unrevised print, the miss was substantial, printing below the lowest estimate. It was a 4-sigma miss to the median estimate of 8.100 million, a massive 427K miss in absolute terms. This miss marks the fourth in the past five months.

Government Sector Job Openings

The inflated number of government sector job openings, which has been the driver behind the recent manipulated JOLTS "beats", fell as expected, from 1.016 million to 924K. Private sector job openings, on the other hand, hit a new 3.5-year low. In the construction sector, job openings are in freefall, dropping to levels not seen since late 2020.

Job Openings vs Unemployed Workers

In the broader context of the jobs report, in June, the number of job openings was just 510K more than the number of unemployed workers, which the BLS reported as 7.163 million. This figure is down from the previous month's 1.373 million and is the lowest since April 2021. In July, the ratio of job openings to unemployed dropped to just 1.07, a significant drop from the June figure of 1.16, the lowest level since May 2021 and now officially below pre-covid levels.

Hiring and Quits

Despite the disappointing job openings data, there was a silver lining as hiring finally staged a modest rebound after last month's collapse. Quits also rose modestly from the lowest level since mid-2020.

Estimations and Guesswork

Despite what the "data" shows, it's important to remember that these figures are all estimates. The BLS itself admits that the response rate to most of its labor surveys has dropped in recent years, particularly in the case of the JOLTS report where the actual response rate remains near a record low 33%. This means that more than two-thirds, or 70% of the final number of job openings, is made up!

Bottom Line

While the sharp drop in job openings is concerning, it's crucial to remember that these figures are largely estimated and subject to significant revisions. The real number of job openings may still be much lower due to the high percentage of guesswork involved in these reports. What are your thoughts on this significant drop in job openings? Do you think the data manipulation is affecting the true state of the job market? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, available every day at 6pm.