U.S. August JOLTS job openings fall to a 5-month low, missing expectations for the third consecutive month

The number of job vacancies in the United States has fallen short of expectations for three consecutive months, combined with consumer confidence plunging to its lowest level in more than a decade, making the market increasingly cautious about the nonfarm payroll report to be released this Friday.

Data released by the U.S. Bureau of Labor Statistics on Tuesday showed that job vacancies in August dropped from 7.335 million in July (revised) to 7.079 million, not only below the median forecast of 7.228 million in a Bloomberg survey of economists but also the lowest level since March this year.

This is the third consecutive month that JOLTS data has missed expectations, extending the trend of a cooling labor market.

Meanwhile, another report released the same day showed that the U.S. consumer confidence index in September plummeted to its lowest since 2014, with consumers turning noticeably pessimistic about the outlook for the job market.

After the release of these data, market expectations for Friday’s nonfarm payrolls report dropped further. Economists had previously forecast around 90,000 new jobs in September, but the net employment increase implied by the August JOLTS data has been below the nonfarm report for three consecutive months, indicating that the actual figure may once again disappoint the markets.

The drop in August job vacancies was relatively broad-based across various industries.

Professional and business services, health care and social assistance, state and local government, manufacturing, and construction sectors all reported varying degrees of job reductions. Vacancies in trade, information, leisure, and hospitality increased somewhat, but not enough to offset declines in the aforementioned sectors.

Among them, the real estate and rental sector saw the most significant drop in job vacancies—only 50,000 were recorded in August, almost halved month-on-month, the lowest level since February 2014. Some analysts view this unusually sharp decline as a key concern in this JOLTS report, potentially signaling a substantial contraction in sector demand.

In terms of overall data trends, the previous pattern of upward revisions over several consecutive months reversed in this report—July data was revised up to 7.335 million, the first upward revision after three straight months of downward adjustments, but this revision made the month-on-month decline in August appear steeper.

The current core feature of the labor market is synchronously sluggish hiring and firing activity.

The number of people voluntarily leaving their jobs in August decreased by 23,000 from July to 3.066 million, with the quit rate holding steady at 1.9%, matching the lowest level since 2020. This indicator is often seen as a barometer of workers’ confidence in the job outlook—the lower the quit rate, the less willing employees are to voluntarily change jobs in search of new opportunities.

Simultaneously, the number of new hires in August rose by 46,000 to 5.192 million, a modest increase that fails to offset the drag from the decline in vacancies. Initial unemployment claims remain near historical lows, indicating that large-scale layoffs have yet to emerge.

Overall, the labor market exhibits a “low hiring, low layoffs, low mobility” structural pattern. While this rigid state suppresses the unemployment rate rise in the short term, it also means a large number of job seekers are finding it difficult to enter the job market, while job-switching opportunities for those employed are also compressed.

In August, the ratio of job vacancies to unemployed people fell back to 1.0 from 1.1 in July, with the job surplus (vacancies minus the number of unemployed) plunging to just 48,000, far below July’s 419,000.

This change means that after a nine-month period of labor supply surplus ending in March 2025, the moderate improvement over the subsequent four months has been largely erased, with the job market back at the supply-demand threshold.

Federal Reserve officials have traditionally monitored this ratio closely as a proxy for labor market balance—at its peak in 2022, the ratio was as high as 2 to 1.

Earlier this month, the Federal Reserve announced its first rate hike since 2023 and indicated in its statement that employment growth was roughly in line with labor force size and the unemployment rate did not change much, providing a basis for turning policy focus to combating inflation.

However, the continued cooling revealed by the JOLTS data may in some measure affect policymakers’ assessment of labor market resilience.

The current JOLTS data serves as a leading indicator for the nonfarm payroll report—the gap between new hires and separations typically correlates strongly with payroll job growth.

The net hiring gap implied by the August JOLTS report was 122,000, while the August nonfarm payroll report recorded 162,000 new jobs, showing a clear divergence between the two metrics.

Analysts believe that, given this divergence has persisted for three months, there is a significant downside risk to the September nonfarm payroll figures to be released this Friday, and the published number may be notably below August’s 162,000. The median economist forecast is about 90,000.

Overall, this JOLTS report continues the cooling trajectory that began after the strong labor data at the start of 2026. The simultaneous weakening of job openings and quit rates has deepened external doubts about the labor market’s ability to maintain its previous resilience.