Tariffs and interest rates suppress job growth, labor market momentum weakens

　　Key Points

1. According to the latest data from the Job Openings and Labor Turnover Survey (JOLTS), the number of job openings by U.S. employers in July was 7.2 million, down from 7.4 million in June and marking the lowest level since September 2024.
2. Although employers have not yet carried out large-scale layoffs, tariffs and high interest rates have suppressed job creation.
3. This job openings report provides more details for a report released by the U.S. government in July—which showed that the hiring market has slowed significantly in recent months.

　　The number of job openings by U.S. employers in July was lower than analysts expected, further proving that the job market is faltering under the dual impact of tariffs and high interest rates.

　　Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the number of job openings in the U.S. economy in July was 7.2 million, down from 7.4 million in June and the lowest value in the past year. In addition, according to a survey of economists, this figure was also lower than the previously expected 7.4 million.

　　The Job Openings and Labor Turnover Survey (JOLTS) supplements the details of the employment market report released by the Bureau of Labor Statistics in July—which showed that hiring activity throughout the summer was weak. At present, many companies have suspended hiring and expansion plans, waiting to see how the Trump administration's large-scale new import tariffs will affect prices, interest rates, supply chains, and consumers.

　　Ali Jaffery, an economist at Canadian Imperial Bank of Commerce (CIBC), wrote in a commentary report: "The message from the July JOLTS report is consistent with other labor market indicators—the momentum of the U.S. job market continued to weaken this summer."

　　Although the number of job openings has slowed, companies have not yet taken large-scale layoff measures, and the layoff rate remains at its lowest level in more than a year. Currently, there is one job opening for every unemployed person, the same as in March, and far below the ratio of "two job openings for every unemployed person" during the hotter job market in 2022.

　　Another factor restraining the job market is the high federal funds rate maintained by the Federal Reserve to curb the post-pandemic surge in inflation. The Fed's key rate has increased borrowing costs for various types of loans, leading to a slowdown in economic and job creation growth. Currently, Fed officials are considering whether to cut rates in September to boost the job market, and they must weigh the "benefits of rate cuts" against "the risk that tariffs pushing up consumer prices could trigger a new round of inflation."