JOLTS Confirms the Labor Market is Slackening

JOLTS Confirms the Labor Market is Slackening

Signs of the labor market slackening raise the odds that no further interest rate increases will be needed.

The number of job openings dropped to 8.7 million in October  from a revised 9.4 million the prior month, according to today’s JOLTS report. The decline was largely driven by a steep drop in retail job openings. That sector has added no jobs since February and poised to lose thousands of cashier jobs, as the use of self-checkout continues to roll out across the country.

The decline in openings brings the number of job openings per unemployed American to just 1.3, the lowest since August 2021, well below its March 2022 peak of 2.0. By that ratio, a measure of labor market tightness often cited by Fed Chair Jerome Powell, the labor market has slackened substantially in recent months. 

The decline in openings follows the trend in online job postings across the U.S., although we would argue that BLS-reported job openings are still somewhat elevated by comparison. Job openings are now 25% higher than their February 2020 level, whereas online job postings have fallen all the way back to their pre-pandemic level. The trend in online postings suggests that JOLTS job openings could decline further in the coming months. 

There are still several remaining pockets of labor market tightness. For example, there are 36% more openings in professional and business services than before the pandemic, and 31% more in health care and social assistance. That is good news for job seekers, who disproportionately express interest in moving into those sectors from other parts of the economy. 

The low and stable layoffs rate is another reason for workers to feel confident. With layoffs and discharges still 17% lower than before the pandemic, workers are still enjoying more job security that was normal before the pandemic. In state and local government, outside of education, for example, layoffs and discharges reached an all-time low in October. 

Take a tour of the report through ZipRecruiter visualizations HERE.