October Job Openings Plummet to Lowest Level Since March 2021

Last Updated on December 7, 2023 by Robert C. Hoopes

Title: Job Openings Plunge to 2½ Year Low, Signaling Labor Market Slowdown

Subtitle: The decrease in vacancies could impact future Federal Reserve decisions

In a concerning development for the labor market, job openings in October reached their lowest point in 2½ years, suggesting a potential loosening of employment opportunities. The number of available positions declined by 617,000, or 6.6%, bringing the total to 8.73 million, well below the estimated 9.4 million.

This downturn is demonstrated by the ratio of openings to available workers, which dropped to 1.3 to 1, down from the previous ratio of 2 to 1, approaching pre-pandemic levels. The Federal Reserve closely monitors the Job Openings and Labor Turnover Survey (JOLTS) as an indicator of labor slack, thus the decline in vacancies may influence future policy decisions by the central bank.

It is worth noting that despite the decrease in job openings, total hires only experienced a slight decline, and layoffs and separations recorded slightly higher figures. Quits, which reflect worker confidence in easily finding new employment, remained relatively unchanged.

The decline in job openings affected various industries, with significant decreases observed in education and health services, financial activities, leisure and hospitality, and retail. These sectors have been particularly affected by the pandemic, and the ongoing challenges they face may be contributing to the decrease.

The JOLTS data, which precedes the Labor Department’s nonfarm payrolls count for November, is expected to show an increase of 190,000 according to economists. The Federal Reserve has expressed concerns about the scorching jobs market and its potential impact on inflation. However, the decline in job openings could help align the labor market with supply, potentially alleviating inflationary pressures.

Looking ahead, the Federal Reserve is anticipated to maintain current interest rates at its upcoming policy meeting next week, with traders projecting rate cuts to commence in March. This decision, in part, will be influenced by the evolving labor market conditions and the implications of the recent decline in job openings.

In other economic news, the November ISM services index indicated expansion with a reading of 52.7%, slightly surpassing expectations. The survey revealed gains in inventory sentiment, inventories, and new export orders. Employment witnessed a slight increase, while prices experienced a slight dip.

With job openings reaching their lowest level in 2½ years, stakeholders in the labor market are closely monitoring developments and await further insights from the Federal Reserve’s decisions to ensure a sustainable and robust recovery.