US job openings plummeting, labor market starting to loosen

WASHINGTON (Reuters) – U.S. job vacancies fell for the first time in nearly two-and-a-half years in August. This suggests that the labor market has begun to cool as the economy grapples with higher interest rates aimed at curbing demand and inflation.

Vacancies remained above 10 million for the 14th straight month, despite a fifth month of decline in job openings this year, the Labor Department reported Tuesday in its Jobs and Labor Turnover Survey, or JOLTS report. .

Job vacancies fell to 1.7 for every unemployed person in August, down from 2 in July, but indicators closely monitoring the labor market’s supply-demand balance are still above historical averages. Layoffs also remain low, indicating a still tight labor market, and the Federal Reserve is likely to maintain its aggressive monetary policy tightening trajectory.

“Even though rising interest rates and inflation and declining business and consumer confidence are beginning to dampen labor market activity,” said Sophia Kolopecki, senior economist at Moody’s Analytics in Westchester, Pennsylvania. “The labor market remains healthy,” he said. “I don’t expect the Fed to be ready to pause just yet,” she said.

Job openings fell by 1.1 million to 10.1 million at the end of August, the lowest level since mid-2021. August’s decline was the biggest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic. Economists polled by Reuters had forecast 10.775 million vacancies.

The sharp decline in job openings was led by health care and social assistance, which fell by 236,000 jobs. Job vacancies in other services fell by 183,000, while vacancies in retail fell by 143,000. The financial activities, professional, leisure and hospitality industries also reported lower job openings.

Vacancy rates in the health care and leisure industries fell even as employment in the two sectors remained below pre-pandemic levels, prompting some economists to speculate that factors other than higher borrowing costs were driving labor demand. I’m guessing it’s behind the cold weather.

Veronica Clarke, an economist at Citigroup in New York, said: “The decline in job openings may reflect that health care providers are accustomed to operating under a labor shortage and are holding back on hiring. There is,” he said.

All four regions saw declines, with the Midwest seeing a significant decline. The job openings rate fell to 6.2% from 6.8% in July. Recruitment increased moderately, and the hiring rate remained at 4.1%.

Wall Street stocks were trading high. The dollar fell against a basket of currencies. US Treasury prices rose.

workers are still quitting

The Federal Reserve is trying to cool labor demand and the economy as a whole in order to bring inflation down to the 2% target. The U.S. central bank has raised its policy rate from near zero to a range of 3.25% from his current 3.00% to his 3.25% range since March, and last month suggested another big hike was due this year. was

The unemployment rate rose to 3.7% from 3.5% in July as job openings fell. The employment and workers gap has fallen from 3.4% in July to his 2.5% of the workforce, or 4 million workers. This could slow wage inflation. It is down from 3.6% of the workforce in March.

“The Federal Reserve welcomes the apparent reduction in excess demand for labor in hopes of easing wage pressures,” said Conrad Dequadros, senior economic adviser at Breen Capital in New York. would,’ he said. “However, the ratio of job openings to unemployment in August was about the same level seen in the fourth quarter of 2021, a record high at the time.”

The number of people who voluntarily quit their jobs increased to 4.2 million from 4.1 million in July. The number of job leavers increased in the lodging and restaurant industry, with 119,000 people retiring, but the number of professional workers decreased by 94,000.

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The turnover rate, which policymakers and economists see as a measure of confidence in the job market, remained unchanged at 2.8%.

Layoffs increased to 1.5 million from 1.4 million in July. Retail, lodging, food service, and specialty services increased. However, layoffs have declined in the construction industry. The Northeast and Midwest had fewer layoffs. However, while increases were reported in the South, there was a sharp increase in the West. This may reflect job cuts in the technology sector.

The layoff rate rose to 1.0% from 0.9% the previous month.

“The labor market heat is slowly cooling off as the demand to hire new workers fades,” said Nick Bunker, head of economic research at Indeed Hearing Lab. and benefits workers less than they did a few months ago.”

Reported by Lucia Mutikani.Editing: Chiju Nomiyama, Andrea Ricci

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