While most traders were reacting to the escalation of the trade war between the United States and China, which caused a steep break on Wall Street on Monday and drove U.S. Treasury 10-year yields to levels not seen October 2016, another report on labor conditions came out showing U.S. job openings and hiring fell in June. This news, combined with last Friday’s July non-farm payrolls report that also showed a slowdown in hiring, could provide another reason for the Federal Reserve to cut interest rates again in September.
According to the Labor Department, job openings, a measure of labor demand, slipped by 36,000 to a seasonally adjusted 7.3 million in June. Since hitting an all-time high of 7.6 million in late 2018, job openings have been flat this year, suggesting some easing in labor market conditions, according to the government’s monthly Job Openings and Labor Turnover Survey, or JOLTS.
The report revealed the job openings rate dipped to 4.6% from 4.7% in May. There were declines in vacancies in the leisure and hospitality sector, and construction. But job openings increased in the real estate and rental and leasing industry, and state and local government education.
Hiring decreased by 58,000 jobs to 5.7 million in June. The hiring rate was unchanged at 3.8%. Hiring fell in the manufacturing and professional and business services industries. It increased by 76,000 jobs in the accommodation and food services industry.
Opinions Support Job Market Slowdown
“Companies may be having difficulty filling positions or may be reticent to hire given the growing uncertainty in the economy,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Business confidence has taken a beating this year.”
“Job openings have eased in such sectors as information, finance, and professional and business services, a possible harbinger of weaker employment gains in coming quarters,” Moody’s Analytics’ Koropeckyj said.
“Employer demand is slowing down, and the labor market isn’t improving at the rate that it was before, but things aren’t getting worse,” said Nick Bunker, an economist at Indeed Hiring Lab. “The slowdown is happening across the entire economy.”
Some economists are saying that the escalating trade war and its impact on the global economy are not the only reasons for slowing labor conditions. They blame the slowdown in hiring on the fading stimulus from last year’s $1.5 trillion tax package.
Impact on Fed Policy
Worries about the slowing job market, combined with concerns about the impact of the U.S.-China trade tensions on the 10-year economic expansion, prompted the Fed to cut its benchmark interest rate last week for the first time in 10 years. Currently, the financial markets have fully priced in another 25-basis point rate cut at the U.S. central bank’s September 17-18 meeting.
This article was originally posted on FX Empire
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