(Boston, MA) April 4, 2023 - Job openings showed a significant decline in the latest edition of the monthly Job Openings and Labor Turnover Survey (JOLTS) on Tuesday from the Bureau of Labor Statistics. The number and rate of job openings fell by 632,000 (6%) to 9.9 million in February, but layoffs also declined slightly. This could mean that the labor market is finally starting to feel the impact of the Federal Reserve’s efforts to curb inflation.
“I think that this report is giving the Fed the first real sign of the soft landing they’ve been hoping for for quite some time now,” said Lightcast Senior Economist Layla O’Kane.
1. In a tight labor market, employers are sharply cutting back on openings rather than laying off workers. In addition to the decline in job postings, layoffs also declined 215,000 over January, to 1.5 million. That means employers need to cut back but are also reluctant to let workers go, because talent is scarce. There are still 1.6 job openings for every available worker.
“We’re finally seeing companies cutting back their openings which is the first step towards easing the tightness of the labor market. This could be what a soft landing looks like in today’s economy,” said Lightcast Senior Economist Ron Hetrick.
“If openings come down, does that mean layoffs go up? Not necessarily. What we’re most likely seeing is companies eliminating the job openings, but not laying off the workers,” said Lightcast Senior Economist Layla O’Kane.
2. The JOLTS report showed signs that problems in the supply chain, a major driver of inflation, are easing. Job openings in transportation, warehousing, and utilities fell 145,000 and manufacturing fell 38,000 in February. That suggests the sector is starting to return to normal.
“The sector that was really driving intense pressure on the economy was the supply chain. That has now unplugged and is showing its clearest signs yet of returning back to normal,” said Lightcast Senior Economist Ron Hetrick.
3. This Friday’s monthly jobs report, covering March, will provide important signals as to whether the cooling trend is continuing. If so, the unemployment rate would edge up, and there would be further signs of slowdown in sectors producing goods.
“The Fed is determining how much further they need to tighten up interest rates, if at all,” said Lightcast Senior Economist Layla O’Kane.