Today the monthly Job Openings and Labor Turnover survey came out for the month of July. Expectations were for 9.5 million job openings, but the actual figure came in at 8.87 million, representing the biggest miss in recent history.

This miss is further evidence that the job market is loosening up a little, taking some pressure off inflation. In the chart below, we can see that weekly hours worked have been falling since January 2021. Roughly a year later, we saw a peak in job openings. Current weekly hours suggest a glide-path down in job openings to the 6 million neighborhood.

Another way we can illustrate the alleviation of labor pressure that JOLTS job openings suggests is by comparing it to the Employment Cost Index, the best statistic of labor costs because it adjusts for the shift in the mix of jobs (high paying, low paying, etc.). We lag the ECI by 6-months as the JOLTS data leads. The current level of job openings are consistent with an ECI 1-year percent change of 3.5% in the quarters to come.

Another perspective is to compare the job openings with the National Federation of Independent Business Jobs Hard to Fill. As one would expect, this is a lagging indicator and it is following the JOLTS job openings down. It is simply becoming easier to fill jobs that are determined to be “hard to fill.”

With labor being the component of inflation that has proven to be the most concerning, we can see that as the job market opens up some, it is related to inflation coming down. The core CPI is following the job openings down. If, as mentioned above, the trajectory of job openings is heading to 6 million, this would be consistent with 2% core inflation.

The bond market has a sense of the loosening job market. 10-Year UST Breakeven Inflation is falling in lock-step with job openings.

While the Fed seems to dart around from data point to data point to validate its policy, it is becoming clear that one of the last lagging data points is falling in line. The labor market is easing, full stop.