The US job market isn’t terrible. But it’s vulnerable.

That’s the key message from the July Job Openings and Labor Turnover Survey released on Wednesday morning – a report which reinforces the idea that the momentum in the labor market continues to weaken, raising the stakes for August’s non-farm payrolls report on Friday.

Of note: the number of job openings tumbled, and the number of Americans involuntarily removed from their job, to use a euphemism, spiked.

In the minutes following the release, traders briefly priced a 50 basis point cut as the most likely outcome for September’s Federal Reserve meeting. 

What’s interesting is that despite this jump in layoffs, the private sector firing rate (that is, layoffs and discharges as a share of private sector workers) is still extremely low versus history.

But that contrasts with a private sector hiring rate that’s quite subdued, and suggests the unemployment rate could be materially higher than it is now.

Guy Berger, director of economic research at the Burning Glass Institute, has termed this odd combination of hiring rates and firing rates sending different signals (along with a quits rate that’s fairly low!)  “The Great Stay.” Conor Sen, the founder of Peachtree Creek Investments, suggested a slightly more auspicious name given the overall slowing in labor market conditions: “The Great Stall.”

This invites the question: what should we care about more? Low firing or low hiring?

“A decline in hiring activity is historically as damaging to workers as layoffs, and deserves to be taken seriously,” wrote Preston Mui, senior economist at Employ America, before the underwhelming July jobs report even came out. Mui flagged that the downturn in hiring preceded the increase in firing during the Great Recession.

This makes some intuitive sense: absent major shocks, we’d expect conditions at a company to move from good (sales up a lot, hiring up), to less good (demand growth slowing, hiring down), to bad (demand down, firing up) – not skipping the middle step. 

So to summarize: job growth is slowing, the unemployment rate is rising, and layoffs have ticked up (at least according to the JOLTS report). 

The labor market needs a boost from somewhere to reduce this vulnerability; to keep the “less good” state of affairs from turning into a “bad” one. And it needs this help… [stares in the direction of 2051 Constitution Ave., the address of the Marriner S. Eccles Federal Reserve Board Building]… yesterday.

Note: Why do we care about July data on the labor market when we already got the non-farm payrolls report for that month?!? With the August jobs report data a couple of days away? Well, the non-farm payrolls report is based on surveys performed in the middle of the month, while the JOLTS report includes data at month-end, so what we got today is a little more current (and granular).