US employers took more than a million job openings off the market in August, the biggest drop since the beginning of the pandemic.
It’s also a marked change from the previous month, when employers posted more than half a million new jobs, according to data from the US Bureau of Labor Statistics.
Job openings don’t show the tightness of the labor market as well as other indicators because employers can easily add or delete job postings without hiring anyone.
Still, the drop is yet another sign that a slowdown in the economy is catching up with the job market. The share of people who quit their jobs, which reached an all time high last November, has fallen in the past few months, indicating workers are less optimistic about finding better options than their current jobs.
“The story from this report is that the job openings data is now in line with what we’re seeing from the quits rate,” said Nick Bunker, economic research director at Indeed Hiring Lab.
Unlike the government data, postings on Indeed have been falling at a steady pace since the end of last year, he noted.
The US Federal Reserve has been interested in seeing openings fall along with other signs of coolness in the labor market before it slows the pace of its rate hikes. The central bank has raised the federal funds rate by 300 basis points this year, and it will decide whether to raise the rate by another 75 basis points or less in its November meeting. But how far they go also depends on US inflation data.
“What we’re seeing in the labor market data is not sufficient,” Bunker said. “Chair Powell and others have been pretty clear that they need to see inflation itself come down before they start considering reducing things.”
The slowdown in the job market means there are now 1.7 job openings per unemployed person vs. 2 in July. The quits rate remained steady at 2.7%, while the layoffs rate ticked up slightly.
That’s not necessarily a sign of impending spike in unemployment in the next couple of months, though. The number of initial claims for unemployment insurance fell again below 200,000 last week, suggesting there are not many workers who are being let go for the first time.