Here’s another bit of evidence for anyone wondering whether the U.S. government's near-collision with its debt ceiling this summer had a meaningful effect on business confidence: Employers ratcheted back their efforts to fill available jobs in July.
Employers had jobs to offer. The total number of job openings stood at 3.23 million at the end of July, from 3.17 million a month earlier, the Labor Department reported today. But the jobs were filled at a slower pace. Total hires fell to 3.98 million, from 4.06 million in June.
Why the slowdown? Possible explanations include so-called structural problems. The job openings might have required skills potential candidates didn’t have, or might have been in places they couldn’t go.
More likely, though, employers started dragging their feet on filling jobs. That, at least, is the conclusion suggested by am indicator known as the "recruiting intensity" index. The index -- developed by economists Steven Davis, Jason Faberman and John Haltiwanger -- captures a number of factors that influence hiring, such as how aggressively employers seek candidates and how quickly they screen applicants.
We updated the index with the latest data and found that it fell 1.4 percent in July. The level was up a bit from its low point in October 2009, but still 16% below its pre-recession average (see chart). Given the fact that the debt-ceiling debate was reaching its apex in July, and the stock market hadn’t yet plunged, the result supports the hypothesis that political uncertainty did have a negative impact on jobs.
The congressional supercommittee, charged with finding another $1.5 trillion in further deficit reduction by the end of this year, is scheduled to hold its first meeting tomorrow. Let’s hope its members are aware of the destructive power they wield.
(Mark Whitehouse is a member of the Bloomberg View editorial board)