In the wake of “Black Monday” on August 5th, global financial markets experienced a meltdown, triggering concerns about the economy. The Chicago Board Options Exchange Volatility Index (VIX), known as the “Wall Street fear gauge,” exhibited significant fluctuations. Market anxiety is attributed in part to recent economic data released in the United States.
On August 2nd, the US Department of Labor reported a meager increase of 114,000 non-farm payrolls in July, a sharp decline from the revised figure of 179,000 in June and well below the market’s expectations of 176,000. The unemployment rate in July rose to 4.3%, the highest level in three years, intensifying fears of an economic downturn in the US. Factors such as increased unrest in the Middle East, the strengthening of the Japanese yen due to interest rate hikes, and poor performance in the tech sector have further fueled market sentiments.
Additionally, on July 30th, the Bureau of Labor Statistics (BLS) in the US released findings from the Job Openings and Labor Turnover Survey, indicating a slight decrease in job vacancies in June. While companies scaled back on hiring and layoffs decreased, the number of resignations hit a three-year low.
The job vacancy tally for June stood at 8.184 million, a decrease from May’s 8.23 million. Despite being the second-lowest monthly figure so far this year, it still exceeded economists’ expectations of 8.02 million.
Conversely, while private sector job openings declined, government job vacancies continued to rise in June, reaching nearly a record high of 1.094 million, primarily bolstered by an 118,000 surge in state and local government vacancies.
Moreover, the job openings-to-applicants ratio stood at 1.24, slightly higher than the 2019 average.
Data released by the US Department of Labor on August 8th revealed a significant drop in initial jobless claims last week, the largest decline in nearly a year, temporarily alleviating market panic. However, the trend of a weakening job market persists, with the number of continued jobless claims reaching a new high since November 2021.
Overall, though the once robust labor market vitality has waned, it still maintains basic resilience.
According to a report by CNN, economists Sarah House and Aubrey George from Wells Fargo Bank noted that the labor market is cooling at a manageable pace but raises alarm signals. The demand for labor is concentrated in a few industries, with workers hesitating to switch jobs and companies reluctant to hire new staff.
Of concern is that June saw the weakest hiring activity in years, with an anticipated recruitment of 5.34 million people and an employment rate (the percentage of employed people in the workforce) falling to its lowest level since April 2020. Data indicates that since February 2014, aside from during the pandemic, the employment rate has never been this low.
According to Daniel Zhu, Chief Economist at Glassdoor, a job review and online recruitment platform, the pace of recruitment has significantly slowed, and the quit rate remains low, suggesting a lack of healthy mobility in the job market.
Zhu added, “Employers are not actively recruiting, indicating employees are not finding opportunities for career advancement but rather prioritizing job security.”
In June, the quit rate grew by 2.1%, the lowest level since June 2020, with projected resignations decreasing from 3.403 million to 3.282 million, marking the lowest monthly figure since November 2020.