Vacancies at US employers fell in March by more than forecast and layoffs jumped, indicating softening demand for workers.
(Bloomberg) — Vacancies at US employers fell in March by more than forecast and layoffs jumped, indicating softening demand for workers.
The number of available positions decreased for a third-straight month to 9.59 million from nearly 10 million a month earlier, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed Tuesday. That was the lowest in nearly two years and fell short of the median estimate in a Bloomberg survey of economists.
The data point to a gradual moderation in labor demand, which should eventually bring the job market into better balance and alleviate upward pressure on wages. While some companies — notably in technology and finance — have cut employees, the labor market as a whole remains resilient and has been a stalwart between the US and recession.
Layoffs jumped to the highest level since December 2020, led by construction, accommodation and food services and health care. The level of quits also eased, indicating budding concerns about job security.
The so-called quits rate, which measures voluntary job leavers as a share of total employment, edged down to 2.5%, matching the lowest in two years. That equates to about 3.9 million Americans and reflected a drop among workers in accommodation and food services.
The ratio of openings to unemployed people ticked down to 1.6 in March, the lowest since October 2021. In the firm labor market that preceded the pandemic, that ratio was about 1.2.
Fed officials watch that ratio closely and have pointed to the elevated number of job openings as a reason why the central bank may be able to cool the labor market — and therefore inflation — without an ensuing surge in unemployment. That said, central bank staffers are forecasting a recession later this year.
What Bloomberg Economics Says…
“The labor market is undoubtedly cooling. Today’s decline in job openings and the quits rate is a welcome development from the Fed’s perspective… The Fed will need to see the labor market deteriorating more rapidly for the balance of risks to shift toward ensuring maximum employment, rather than price stability.”
— Stuart Paul, economist
To read the full note, click here
The data come at the start of the Fed’s two-day meeting in Washington, in which officials are broadly expected to raise interest rates for possibly the final time of this cycle.
Many economists expect a combination of headwinds like tightening credit conditions and persistent inflation to tip the US economy into recession this year. A key element of that, though, is a significant weakening in the labor market.
Given companies tend to freeze hiring before initiating layoffs, the JOLTS report will be a key indicator of labor market strength in coming months. Hires were little changed in March, according to Tuesday’s report.
The data precede Friday’s monthly jobs report, which is currently forecast to show employers added 180,000 jobs in April. Economists are expecting the unemployment rate to tick up slightly and for average hourly earnings to rise at a similar pace as the prior month.
Some economists have questioned the reliability of the JOLTS statistics given the survey’s low response rate. By year-end, it had fallen to about 31%, roughly half the rate just three years earlier.
–With assistance from Jordan Yadoo and Augusta Saraiva.
(Adds Bloomberg Economics comment)
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