Labor Market Cooling: Job Openings Drop Below Expectations, Pressuring Rate Cut Hopes

The U.S. Bureau of Labor Statistics (BLS) reported on Wednesday that the number of job openings in July stood at 7.18 million, according to the Job Openings and Labor Turnover Survey (JOLTS) data. This figure came in below the market expectation of 7.4 million, reflecting a slight decline from the 7.437 million recorded in June. The data provides further insight into the cooling of the U.S. labor market, which has seen job openings steadily fall since peaking at 12 million in March 2022.

Job Openings have fluctuated over the past several months, with a notable decline from a high of over 7.7 million in January to 7.2 million by March 2025. A brief uptick followed in May, with openings reaching 7.77 million, but this was quickly followed by a pullback in June to 7.4 million. The recent JOLTS report suggests the labor market remains under pressure, as openings continue to contract.

The timing of the JOLTS release is significant as it precedes the August Nonfarm Payrolls report, which is scheduled for release on Friday. Recent labor data has shown signs of a weakening labor market, with July Nonfarm Payrolls rising by only 73,000, missing the market forecast of 110,000. Furthermore, the BLS revised the May and June Nonfarm Payrolls data downward by 125,000 and 133,000, respectively. These revisions, along with the continued drop in job openings, indicate ongoing challenges in labor market dynamics.

Market participants and policymakers are closely monitoring JOLTS data due to its relevance in understanding labor supply and demand, which are key factors in wage inflation and broader economic performance. The Federal Reserve has shown increasing concern about the labor market. In his remarks at the Jackson Hole Symposium, Fed Chairman Jerome Powell highlighted rising downside risks, including a slowdown in labor force growth due to tighter immigration policies. San Francisco Fed President Mary Daly echoed concerns, emphasizing the need for timely policy decisions in light of potential inflationary impacts from tariff-related price increases.

Given the recent economic data and dovish comments from Fed officials, investors are widely anticipating a 25 basis point rate cut at the September Federal Open Market Committee meeting. The CME FedWatch Tool currently shows a nearly 92% probability of such a move. A significant drop in job openings—particularly a reading below 7 million—could reinforce these expectations and further weaken the U.S. dollar. However, any result stronger than the forecast is unlikely to alter the broader market view of an easing monetary policy path, limiting potential positive reactions for the dollar.

The JOLTS report will also have implications for the EUR/USD pair. Analysts at FXStreet noted that EUR/USD is currently testing key technical levels, with a pivot at 1.1670. A breakdown below 1.1590 could trigger renewed selling pressure. While the market remains cautious, the outcome of the JOLTS report is expected to influence short-term trading activity and sentiment ahead of the Nonfarm Payrolls report. A weaker-than-expected JOLTS reading could support the euro and limit the dollar’s ability to recover in the near term.

Source: [1] US JOLTS Job Openings expected to edge slightly lower in July (https://www.fxstreet.com/news/us-jolts-job-openings-expected-to-edge-slightly-lower-in-july-202509030800) [2] EUR/USD Price Forecast: Waiting for US employment figures (https://www.fxstreet.com/analysis/eur-usd-price-forecast-waiting-for-us-employment-figures-202509031256)