Job openings hit a two-year low

U.S. job openings pulled back in October to the lowest level since early 2021, underscoring the gradual cooling in the labor market that the Federal Reserve would like to see.

Available positions decreased to 8.7 million from a downwardly revised 9.4 million in the prior month, the Bureau of Labor Statistics Job Openings and Labor Turnover Survey showed Tuesday. The figure was below all estimates in a Bloomberg survey of economists and the decline was broad-based across sectors.

As the Fed keeps interest rates elevated to bring down inflation, policymakers are hoping the labor market softens through less demand for new workers rather than employers cutting jobs.

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So far, that's largely been working: Vacancies have retreated from a peak of 12 million last year and the unemployment rate has stayed historically low, though it's climbed somewhat in recent months.

Taken with a separate report Tuesday that showed easing inflation in the service sector, the data indicate that both sides of the Fed's mandate — employment and price stability — are moving toward their longer-term estimated levels, according to Wells Fargo.

"While prices are still rising, they're doing so at a slower clip," economists Tim Quinlan and Shannon Seery Grein said in a note. "The labor market is also becoming less tight and thus exerting less upward pressure on wages."

Quits Stabilizing

At the peak last year, more than four million people were quitting their jobs every month — reflecting confidence in their ability to secure new positions, often with much better pay. That's now stabilizing: The so-called quits rate, which measures voluntary job-leavers as a share of total employment, held for a fourth month at the lowest level since early 2021.

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The JOLTS data also showed layoffs remained historically low and hiring eased somewhat.

"Today's report suggests progress on the path to a soft landing, with a continued cooldown in job openings coupled with a stagnation in quits and layoffs," Noah Yosif, lead labor economist at workforce-management firm UKG, said in a note. "These trends indicate more balance between demand and supply in line with the narrative of moderation within the labor market."

The figures support expectations for the Fed to leave interest rates unchanged at next week's policy meeting. However, Fed Chair Jerome Powell is still likely to push back on market bets for rate cuts until inflation is on a sustainable path to the central bank's 2% goal.

The ratio of openings to unemployed people slid to 1.3, the lowest since mid-2021. While still somewhat indicative of a tight labor market, the figure has eased substantially over the past year. At its peak in 2022, the ratio was two-to-one.

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The report on the service sector, as measured by the Institute for Supply Management, indicated employment ticked up modestly in November amid stronger business activity. Still, commentary from service providers reflected only "tepid" improvement, and there's "little indication" that the sector's expansion will continue, Bloomberg economist Estelle Ou said in a note.

With employers scaling back hiring and wage growth decelerating, it's unclear how much longer the job market will underpin strong consumer spending.

The data come just a few days ahead of the government's monthly jobs report, which is currently forecast to show employers added some 189,000 jobs in November. The unemployment rate is seen holding at the highest level in nearly two years.

Some economists have questioned the reliability of the JOLTS statistics in part because of the survey's low response rate.