The Federal Reserve’s attempts to slow inflation may be having an impact, as job openings fell below 10 million in February for the first time in nearly two years.
The 9.93 million job openings were 632,000 lower than January’s downwardly revised figure, according to data released Tuesday by the Labor Department. It was also lower than the Street’s expected 10.4 million openings.
The February figure brings the ratio of job openings to available workers down to less than 1.7 to 1, whereas it has previously been nearly 2 to 1.
The cooling labor market is a sign that the Fed’s nine interest rate hikes since March 2022 may finally be having an impact in bringing down inflation.
“The labor market is starting to loosen as the number of job openings declined in most sectors,” said Jeffrey Roach, chief economist at LPL Financial. “As the economy slows, firms will likely cut openings and workers will be less likely to quit in search of better hours and higher pay.”
The question now is whether there will be more rate hikes to come.
“The Fed could consider pausing rate hikes at the next meeting but only if the upcoming employment report shows signs of material weakness and the March [consumer price index] report reveals lower inflation,” Roach said.
In addition to fewer job openings, the data showed decreasing hires and separations also decreased slightly. The number of quits, a metric of labor confidence in the ability to switch jobs, rose by 146,000 to more than 4 million.
Professional and business services saw a decline of 278,000 job openings in February, while trade, transportation and utilities decreased by 210,000. Accommodation and food services, a key gauge of consumer demand, dropped 125,000.
The lone increase in available jobs was in construction, which saw 129,000 more openings.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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