Job openings hit their lowest level since April 2021 in a sign that the Federal Reserve's efforts to cool the job market through interest rate hikes is paying off.
The latest Job Openings and Labor Turnover Survey, or JOLTS report, released Tuesday revealed 9.6 million job openings at the end of March, down from 9.9 million in February. In April 2021, they stood at 9.3 million.
The decline in job openings moves closer to the "better balance" in labor markets that Federal Reserve Chair Jerome Powell and other Fed officials have referenced.
"The decline in job openings since the start of the year indicates the cumulative impact of the Fed's aggressive rate hike campaign is starting to bite," economists at Oxford economics wrote. "However, the level of openings is still elevated, and we expect the Fed to opt for another 25bps increase this week as it looks to ensure that the rebalancing of supply and demand in the labor market continues."
The Fed's latest meeting started Tuesday, with Fed officials expected to deliberate on what's next in the fastest interest rate hike cycle in four decades. Fed officials consider reports like JOLTS and other economic data as signs of whether its aggressive rate hike path is cooling inflation. Part of what has driven prices higher is wage growth resulting from a hot job market.
The Fed will announce its latest policy decision at 2 p.m. ET Wednesday, with Fed Chair Jay Powell set to hold a press conference a half-hour later. According to data from the CME Group, markets are placing an 87% chance on the Fed raising rates by 0.25% on Wednesday.
A 0.25% hike in interest rates would push the Fed’s benchmark rate to a range of 5%-5.25%. The benchmark rate hasn’t breached 5% since July 2007.
Layoffs picked up in March, according to the JOLTS report from the U.S. Bureau of Labor statistics. Layoffs and discharges in March hit 1.8 million, the highest level since December of 2020. The news comes as layoffs expand beyond big tech during first quarter earnings season.
The quits rate ticked down to 2.5%. While often seen as an indication some workers may not want to test the job environment, the March quits rate is still above the 2019 average of 2.3%. The ratio of job openings to unemployed workers dropped to 1.6 in March, the lowest level since October 2021 but still significantly higher than pre-pandemic levels.
The oft-cited ratio of job openings to unemployed workers declined to 1.6 in March, its lowest level since October 2021 pic.twitter.com/1NS81OpvUK
— Nick Bunker (@nick_bunker) May 2, 2023
Wall Street will turn its focus to the April jobs report next. The report, scheduled for release Friday, is expected to show 180,000 nonfarm payroll jobs were added to the US economy last month, with the unemployment rate ticking slightly higher to 3.6%, according to data from Bloomberg. In March, the U.S. economy added 236,000 jobs while the unemployment rate fell.
Josh is a reporter for Yahoo Finance.
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