US Job Openings Hit Three-Year Low, Showing Cooling Labor Market

(Bloomberg) -- US job openings fell in March to the lowest level in three years while quits and hiring slowed, indicating more softening in the labor market.

Available positions decreased to 8.49 million from an upwardly revised 8.81 million reading in the prior month, the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS, showed Wednesday. The figure was lower than all but one estimate in a Bloomberg survey of economists.

The report illustrates the kind of cooling that the Federal Reserve would like to see, with demand for workers slowing through fewer openings rather than outright job losses. Policymakers are widely expected to hold interest rates at the highest level in two decades at the conclusion of their meeting later Wednesday, where the focus will be on Chair Jerome Powell’s comments for any clues on the latest thinking around cutting rates.

The so-called quits rate, which measures people who voluntarily leave their job, fell to 2.1%, the lowest since August 2020. A decline in the metric recently suggests that people are holding onto their current roles as they are feel less confident in their ability to find new jobs and positions that may pay better.

Read More: In-Demand Workers Are Staying Put as US Labor Market Cools

The latest month’s pullback in vacancies was concentrated within construction as well as finance and insurance. Meantime, openings increased somewhat for state and local education jobs.

A separate report Tuesday showed a broad gauge of US labor costs closely watched by the Fed accelerated in the first quarter by more than forecast, illustrating persistent wage pressures that are keeping inflation elevated.

The hiring rate dropped to 3.5%, matching the lowest since the onset of the pandemic. The decline was broad, led by trade and transportation. Layoffs also eased, with the fewest people let go since the end of 2022.

What Bloomberg Economics Says...

“With the labor market moving into better balance, we expect wage pressures to wane in months ahead. Still, with inflation consistently surprising to the upside to start the year, we expect the Fed to remain on hold at the May and June FOMC meetings.”

— Stuart Paul. To read the full note, click here

The ratio of openings to unemployed people dropped to 1.3, matching the lowest since August 2021. The figure — which Fed officials pay close attention to — has eased substantially over the past year. At its peak in 2022, the ratio was 2 to 1.

The government’s monthly employment report due Friday is expected to show hiring moderated but remained strong in April. Including government positions, economists forecast US employers added 240,000 jobs, while monthly wage gains and the unemployment rate likely held steady.

A separate report out Wednesday from the ADP Research Institute showed that private employers hired by more than forecast in April while pay growth cooled.

Some economists have questioned the reliability of the JOLTS statistics, in part because of the survey’s low response rate.

(Adds graphic, Bloomberg Economics comment)

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