Job openings fall to 21-month low of 9.9 million. Labor cools, but it’s still hot
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The numbers: Job openings fell to a 21-month low of 9.9 million in February in a sign that a softer U.S. economy is loosening up a historically tight labor market.
Job listings declined from a revised 10.6 million in January, the Labor Department said Tuesday. That’s the fewest openings since October 2021.
Economists polled by the Wall Street Journal had forecast job listings to total 10.5 million.
The number of job openings is seen as a cue to the health of the labor market and the broader U.S. economy. Job postings have dropped from a record high last spring, but many companies are still hiring.
“The labor market is still very hot,” said chief economist Bill Adams of Comerica. “But the big drop [in job openings] is a sign the labor market is cooling in general.”
The number of people quitting jobs, meanwhile, rose slightly to 4 million, which came as a bit of a surprise. Quits had fallen below 4 million in January for the first time in 19 months.
The Federal Reserve wants to see job openings and hiring slow even further to ease the upward pressure on inflation.
Key details: Job openings fell the most at hotels, restaurants, retailers, transportation companies and professional businesses. Those have been some of the industries that have been hiring the most new employees.
Listings rose slightly at construction companies and financial firms.
While many openings are never actually filled, economists view the trend in job postings as a rough gauge of how strong the labor market is.
The number of job openings for each unemployed worker dropped to 1.7 in February from 1.9 in the prior month. That’s the lowest level since October 2021, but it is still well above prepandemic levels of 1.2.
The Fed is watching the ratio closely and wants to see it fall back to prepandemic norms.
The so-called quits rate among private-sector workers rose a tick to 2.9%. It peaked at 3.3% almost one year ago.
People quit more often when they think it’s easy to get a better job, but they tend to stay put when the economy weakens.
By and large, the labor market is still quite strong. The U.S. added 311,000 new jobs in February, and Wall Street estimates that 235,000 were created in March. The March jobs report comes out on Friday.
“The job market is still not at the point where the Fed can take a step back and chill,” said senior economist Jennifer Lee of BMO Capital Markets.
Big picture: A sizzling labor market appears to be cooling off, but by most measures it’s still running too hot for the Fed.
The central bank has sharply raised interest rates since last spring to slow the economy and shrink the demand for labor as part of a strategy to squelch the worst inflation in 40 years. The Fed is likely to lift rates at least one more time.
Higher rates could even trigger a recession this year, economists say, and increase the nation’s low 3.6% unemployment rate.
Looking ahead: “While this is a step in the right direction, the number of job openings per unemployed person remains elevated at 1.7, and the tick up in the quits rate also shows that there is still more work to do in order to cool the labor market,” said economist Katherine Judge of CIBC Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
fell in Tuesday trades after the job-openings report. Bond yields
TMUBMUSD10Y,
also fell.
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