The U.S. labor market showed signs of cooling in October, with job openings reaching their lowest level in over two years.
The number of job openings dropped from 9.31 million to 8.7 million. This marks the lowest point since March 2021, according to the latest Job Openings and Labor Turnover Summary (JOLTS) report, which was published on Tuesday by the U.S. Bureau of Labor Statistics. Additionally, the job openings rate of 5.3% saw a 0.3 percentage point dip over the month and a 1.1% decrease over the year.
The industries with decreases in job openings during the month include health care and social assistance (-236,000), finance and insurance (-168,000), and real estate and rental and leasing (-49,000). Conversely, job openings increased by +39,000 in the information sector.
“Now we’re starting to head back to levels that are truly consistent with what you would call a cooling labor market,” LinkedIn chief economist Karin Kimbrough told CNN Business. “I think this reflects some caution on the part of employers. They’ve had a cautious stance in terms of hiring, but you can see it now in terms of the job openings aren’t coming in as fast as before.”
U.S. employers cut back on hiring last month, with the number and rate of hires changing little from September, clocking 5.88 million and 3.7% in October, respectively.
Overall, hiring decreased in accommodation and food services (-110,000), leisure and hospitality (-105,000), and retail trade (-76,000).
Professional and business services (+94,000) and construction (+66,000) were the sectors that saw increased hiring in October.
As for total separations in October, including quits, layoffs, and discharges, there was little change, according to the report. Data showed that the number of total separations in October changed minimally, with the rate coming in unchanged at 3.6% for the fifth consecutive month.
Considering Federal Reserve chair Jerome Powell has been calling for signs of an easing labor market since March 2022, Tuesday’s data could further strengthen the idea that policymakers are done hiking rates.
“This data certainly solidifies the Fed’s decision to keep rates unchanged while looking for signs of a pivot in the upcoming meeting next week,” said Tuan Nguyen, U.S. economist at RSM, CNBC reported. “Besides inflation, job opening data, serving as a proxy for labor demand and wage pressure, has been the Fed’s top priority in recent times.”
The last Federal Open Market Committee (FOMC) meeting of 2023 will be held on December 12-13. Rate hike odds from the CME FedWatch Tool suggest a nearly 100% chance the policy-setting FOMC will keep rates unchanged in December.
The JOLTS report for November is scheduled to be released on Wednesday, January 3, 2024.
