Job Openings Fall Below 10 Million for First Time in Nearly Two Years

The number of job openings decreased below 10 million in February, the first time in almost two years, indicating that the Federal Reserve’s attempts to minimize the labor market growth may have a certain effect.

As per the monthly report by the Labor Department’s Job Openings and Labor Turnover Survey, the available positions totaled 9.93 million, dropping by 632,000 compared to January’s revised number. The Wall Street analysts had anticipated a value of 10.4 million.

The previous time job openings fell below 10 million was in May 2021.

To reduce inflation, which had hit a 41-year high in the summer of 2022, the Federal Reserve has targeted the rapidly developing labor market. The central bank increased benchmark interest rates nine times since March 2022 but had not been able to check the job concerns that the market faced.

Before the release of February’s data, the number of job openings was almost double the available workers. The latest stats bring this ratio down to less than 1.7 to 1.

Treasury yields fell after the announcement, which could lead to the Fed refraining from further rate hikes. Stocks decreased as well.

According to Jeffrey Roach, LPL Financial’s chief economist, “The labor market is starting to loosen as the number of job openings declined in most sectors. As the economy slows, firms will likely cut openings and workers will be less likely to quit in search of better hours and higher pay.” He also added, “The Fed could consider pausing rate hikes at the next meeting but only if the upcoming employment report shows signs of material weakness and the March [consumer price index] report reveals lower inflation.”

The Fed scrutinizes the JOLTS data for labor slack signals, even though the numbers run a month late. Along with the decrease in job openings, there was a slight decline in hires and separations. On the other hand, a 146,000 increase in quits indicated labor’s confidence in the ability to switch jobs.

Most categories saw a decline in job openings, except for construction jobs, which increased by 129,000. Professional and business services saw a slide of 278,000 job openings on the month, while trade, transportation, and utilities decreased by 210,000. The accommodation and food services sector, which is an important measure of consumer demand, reduced by 125,000.

The job market data in March will be released three days after JOLTS data. Nonfarm payrolls for March are likely to indicate a 238,000 increase, with the unemployment rate remaining steady at 3.6%.