The drop in job openings is a welcome development for the Federal Reserve, which has been fighting to bring down inflation by raising interest rates to cool off the broader economy. The Fed monitors job openings as a sign of its progress.
The latest data shows that the Fed has so far been successful in slowing down labor market demand without triggering widespread layoffs. Layoffs and the rate of workers quitting their jobs changed little in October and have been flat for months, despite concentrated pockets of job losses in tech and media.
“The labor market is unmistakably cooling after running red hot for the last few years,” Bill Adams, chief economist at Comerica Bank wrote in an email Tuesday. “The post-pandemic recovery saw a surge of hiring and resignations which fueled a sharp acceleration of wage gains … But that frenzy is over.”
Job openings peaked in March 2022 with 12 million jobs openings. For much of that year, there were two job openings for every unemployed worker in the United States, giving labor unusual power to demand raises and switch into higher-paying jobs.
October’s report shows the lowest job openings figure since March 2021, a period when the economy was still struggling to get back on its feet after more than 20 million people lost their jobs during the coronavirus pandemic. But job openings are still elevated above their pre-pandemic levels, signaling a labor market that remains favorable to workers.
The November jobs report to be released Friday will provide the latest snapshot of the state of the labor market headed into the new year. Overall job creation has also shown sustained cooling in recent months, with the economy adding 150,000 jobs in October, but has remained strong enough to keep the economy afloat.
