In June, the JOLTS job openings stood at 7.437 million, slightly below the anticipated 7.500 million, marking the lowest level since April 2025. The previous month’s figure was revised from 7.769 million to 7.712 million, while the vacancy rate dropped to 4.4% from 4.6%.
Regarding hires, there were 5.2 million with a rate of 3.3%, showing little change from May. The arts, entertainment, and recreation sector faced a decline of 42,000 positions.
Total Separations
Total separations reached 5.1 million with a rate of 3.2%, similar to the previous month. State and local government education saw a reduction of 39,000 jobs, and the federal government decreased by 20,000 positions.
Voluntary quits amounted to 3.1 million at a rate of 2.0%, with marginal change from May’s 2.1%. Professional and business services experienced a decline of 114,000, while state and local government education and the federal government decreased by 20,000 and 5,000, respectively.
Layoffs and discharges, at 1.6 million, maintained a rate of 1.0%, unchanged from May. Declines included 35,000 in arts, entertainment, and recreation, and 19,000 in state and local government education. Other separations totaled 314,000, remaining stable from May.
We see this report as clear evidence the labor market is losing momentum. Job openings missed estimates and fell to their lowest level since April, while the quits rate, a key measure of worker confidence, also ticked down. This is not a collapse, but it is a controlled cooling that we have been anticipating.
Federal Reserve and Market Response
This softening trend is exactly what the Federal Reserve wants to see. Combined with the recent June Consumer Price Index report showing inflation moderating to a 2.8% annual rate, this weak jobs data gives the central bank cover to ease policy. We believe this solidifies the case for a rate cut at the September meeting.
In response, we are looking at derivatives that benefit from falling interest rates. This includes going long Secured Overnight Financing Rate (SOFR) futures for the fourth quarter. Options on long-duration bond ETFs should also perform well, specifically by positioning for higher prices.
For equity markets, this reinforces the “bad news is good news” narrative for now. As long as the data points to a soft landing and not a sharp recession, we expect less market fear. We will be looking to sell volatility by writing out-of-the-money call options on the VIX.
This pattern is reminiscent of the market in late 2023, when weakening labor data was cheered as a sign of future Fed easing. Today’s report shows the ratio of job openings to unemployed persons has fallen to 1.4, a much healthier balance than the 2.0 level seen during the peak inflation years. Consequently, fed funds futures now imply a greater than 75% probability of a quarter-point rate cut by the end of September.
