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US Job Openings Drop Sharply, Labor Market Begins to Relax

US Job Openings Drop Sharply, Labor Market Begins to Relax
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  • Job openings fell 1.1 million to 10.053 million in August
  • Health care and retail lead decline in vacancies
  • Resignations, dismissals, hirings increase moderately

WASHINGTON, Oct 4 (Reuters) – U.S. job openings fell the most in nearly two-and-a-half years in August, suggesting the job market was starting to cool as the economy grapples with interest rates. higher prices aimed at curbing demand and controlling inflation. . .

Despite the fifth month of declines in job openings this year, as reported by the Department of Labor in its Survey of Job Openings and Labor Turnover, or JOLTS report, on Tuesday, vacancies remained above 10 million for the fourteenth consecutive month.

While there were 1.7 job openings for every unemployed person in August, down from two in July, this closely watched measure of supply-demand balance in the labor market remained above its historical average. Layoffs also remained low, signs of a still tight labor market, which is likely to keep the Federal Reserve on its path of aggressive monetary policy tightening.

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“Even as higher interest rates and inflation, and weaker consumer and business confidence are beginning to dampen labor market activity, the labor market still remains healthy,” said Sophia Koropeckyj, senior economist at Moody’s Analytics. in West Chester, Pennsylvania. “We’re hoping the Fed isn’t ready to pause yet.”

Job openings fell from 1.1 million to 10.1 million on the last day of August, the lowest level since mid-2021. August’s drop 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 general decrease in job offers was led by health and social assistance, with a decrease of 236,000. There were 183,000 fewer job openings in other services, while vacancies fell by 143,000 in the retail industry. Fewer job openings were also reported in the financial, professional, leisure and hospitality industries.

Vacancies in the health care and leisure industries declined despite employment in the two sectors remaining below their pre-pandemic levels, leading some economists to speculate that other factors, in addition to higher costs of indebtedness, were behind the cooling in the demand for workers.

“The drop in vacancies could reflect health care providers becoming more accustomed to operating under labor shortages and giving up on hiring,” said Veronica Clark, an economist at Citigroup in New York.

All four regions saw declines, with a large decline in the Midwest. The job vacancy rate fell to 6.2% from 6.8% in July. Hiring increased moderately, keeping the hiring rate at 4.1%.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury prices rose.

SHAKE
A pedestrian walks past a ‘Now Hiring’ sign at a Chase Bank branch in Somerville, Massachusetts, U.S., September 1, 2022. REUTERS/Brian Snyder

WORKERS CONTINUE TO LEAVE

The Fed is trying to cool down labor demand and the broader economy to bring inflation down to its 2% target. Since March, the US central bank has raised its policy rate from near zero to the current range of 3.00% to 3.25%, signaling last month that bigger hikes were on the way this year.

The drop in job openings was accompanied by a rise in the unemployment rate to 3.7% from 3.5% in July. The gap between jobs and workers fell to 2.5% of the labor force, or 4.0 million workers, from 3.4% in July, which could curb wage inflation. It has decreased from 3.6% of the active population in March.

“The Fed will welcome this apparent decline in excess labor demand in the hope that it will ease wage pressures,” said Conrad DeQuadros, chief economic adviser at Brean Capital in New York. “However, the ratio of job openings to unemployment in August was roughly at the same level as that seen in the fourth quarter of 2021, which was a record at the time.”

Job offers Unemployment and salary growth

The number of people who voluntarily quit their jobs rose to 4.2 million from 4.1 million in July. Casualties increased in the hotel and restaurant sector, where 119,000 more people resigned, but fell by 94,000 in the professional sector

and the business services sector.

The resignation rate, seen by politicians and economists as a measure of labor market confidence, was unchanged at 2.8%.

Layoffs rose to 1.5 million from 1.4 million in July. There were increases in retail trade, accommodation and food services, as well as professional services. Layoffs, however, fell in the construction industry. There were fewer layoffs in the Northeast and Midwest. But the South reported an increase, while the West saw a jump, likely reflecting job cuts in the tech sector.

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

“The labor market heat is slowly reaching its boiling point as the demand for hiring new workers fades,” said Nick Bunker, head of economic research at Indeed Hiring Lab. of job seekers, only with fewer benefits for workers than a few months ago”.

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Information from Lucía Mutikani; Edited by Chizu Nomiyama and Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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