In a fresh sign of labor market cooling, the number of job openings in the country has dropped to a two-and-a-half year low as America’s manufacturing sector extends its decline.
“That’s a monthly decline of 617,000 jobs, a sharper-than-expected drop,” Mark Hamrick, senior economic analyst at Bankrate, told The Epoch Times in an emailed statement.
The number of job openings has been on a declining trend since hitting a record 12.0 million in March 2022. That’s when the Federal Reserve embarked on a feverish pace of raising interest rates in order to quash soaring inflation.
Economic activity has been cooling as higher interest rates crimp demand, with a number of economists expecting a recession next year. Fed officials, who hope to avoid a downturn and instead get an economic “soft landing,” have welcomed some loosening in the labor market.
Speaking during an event at Spelman College in Atlanta on Friday, Federal Reserve Chair Jerome Powell said “we are getting what we wanted to get” out of the economy.
A measure that Fed officials watch closely is the ratio of job openings to unemployed people. At the height of the job opening expansion in March 2022, this ratio stood at roughly 2, meaning two vacancies for every unemployed person.
The latest data show that, at the end of October, this ratio had dropped to 1.3, the lowest since mid-2021. Before the pandemic, this ratio was around 1.2, so the current level suggests the labor market is still somewhat tight—though continuing to unwind.
‘Better Balance’The JOLTS report also showed that level of layoffs and discharges remained little changed at 1.6 million, while the rate remained unchanged from September at 1 percent.
The number of quits changed little at 3.6 million while the quits rate was unchanged at 3.6 percent for the fifth consecutive month.
Noteworthy over-the-month drops in hiring activity were in health care and social assistance (minus 236,000), finance and insurance (minus 168,000), and real estate and rental and leasing (minus 49,000). The number of job openings rose in information (39,000).
Overall, the latest JOLTS data is likely to be seen as a welcome sign by the Fed that its inflation-fighting rate hikes are filtering into the real economy and putting a dent in the job market.
“In the words of Federal Reserve officials, the supply and demand of labor is coming into better balance,” Mr. Hamrick said.
Manufacturing MalaiseA recent run of economic data is flashing a warning sign for the U.S. economy.
The decline is the sharpest monthly drop since April 2020, when pandemic lockdowns rattled the economy and threw it into a recessionary tailspin.
Recession Coming?Further, a key U.S. leading economic indicator from The Conference Board dropped for the 19th consecutive month in October.
“The Conference Board expects elevated inflation, high interest rates, and contracting consumer spending—due to depleting pandemic saving and mandatory student loan repayments—to tip the US economy into a very short recession,” Justyna Zabinska-La Monica, business cycle indicators senior manager at the Conference Board, said in a statement.
“Further cooling in the job market is expected, but not a chill or a freeze, per se,” Mr. Hamrick said. “A soft landing appears to be the greatest likelihood for next year, while a mild and short recession can’t totally be ruled out.”