WASHINGTON — U.S. job openings fell to a 1½-year low in August and hiring declined, suggesting employment growth was slowing largely because of ebbing demand for labor as the economy loses momentum.
Despite the third straight monthly drop in vacancies reported by the Labor Department on Wednesday, job openings are still plenty enough to ease financial market fears of a looming recession. Job openings are being closely watched for signs of whether an erosion in business confidence, which has weighed on capital investment, is spilling over to hiring.
A 15-month trade war between the United States and China has hurt business confidence, leading to a retrenchment in business spending and a downturn in manufacturing. The trade war has stoked financial market fears of a recession.
“The labor market is slipping a little, but it’s not flashing any recession signals yet,” said Chris Rupkey, chief economist at MUFG in New York. “You can’t have a recession with 7 million help-wanted signs posted up in factory and store windows around the country.”
Job openings, a measure of labor demand, dropped by 123,000 to a seasonally adjusted 7.05 million in August, the lowest level since March 2018, the government said in its monthly Job Openings and Labor Turnover Survey, or JOLTS.
Job openings have been trending lower this year since scaling an all-time high of 7.63 million in late 2018. The job openings rate fell to 4.4% in August from 4.5% in July.
While the Federal Reserve continues to view the labor market as strong, minutes of the U.S. central bank’s Sept. 17-18 policy meeting showed some officials believed “it would be important to be vigilant in monitoring incoming data for any sign of softening in labor market conditions.”
This was in response to a recent estimate from the Labor Department that the economy created 501,000 fewer jobs in the 12 months through March 2019 than previously reported, the biggest downward revision in the level of employment in a decade.
That suggested job growth over that period averaged around 170,000 per month instead of 210,000.
U.S. stocks were trading higher as a report that China was open to a partial trade deal soothed investor nerves ahead of high-level talks on Thursday. The dollar was little changed against a basket of currencies and U.S. Treasury prices fell.
The reduction in vacancies in August was led by manufacturing, with job openings in the nondurable goods industries falling by 49,000. Manufacturing, which the Trump administration has sought to boost with import tariffs, has ironically borne the brunt of the trade war.