U.S. job openings fell more than expected in April, pushing the number of available jobs per job-seeker to its lowest in nearly three years as labor market conditions soften in a manner that could help the Federal Reserve’s fight against inflation.
Job openings, a measure of labor demand, were down 296,000 to 8.059 million on the last day of April, the lowest level since February 2021, the Labor Department’s Bureau of Labor Statistics said on Tuesday in its Job Openings and Labor Turnover Survey, or JOLTS report.
That left 1.24 openings in April for every unemployed person, down from 1.3 in March and the lowest since June 2021. The ratio, watched closely by Fed Chair Jerome Powell as a sign of labor market tightness, is well below its post-pandemic peak of nearly two to one, and now matches the high-water mark of pre-pandemic times.
Though still elevated, the drop in job openings points to “an ongoing normalization between supply and demand for labor,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “From a policy perspective, the Fed’s challenge will be to maintain rates at a level that not only helps keep inflation in check but also prevents a significant weakening in the labor market going forward.”
Economists polled by Reuters had forecast 8.355 million job openings in April. Vacancies peaked at a record 12.0 million in March 2022. Data for March was revised lower to show 8.355 million unfilled positions instead of the previously reported 8.488 million.
Openings fell broadly across sectors; only five industries – professional services, private education, retail, finance and insurance, and transportation – had an increase in openings.
Still the report did not suggest an alarming weakening of the labor market. The number of people quitting their jobs rose 98,000 to 3.507 million in April. The quits rate was 2.2% for the sixth straight month, and the lowest since September 2020.
And layoffs, at 1.52 million, were at their lowest since December 2022.
Federal Reserve officials next week are expected to leave the U.S. central bank’s policy rate in the same 5.25%-5.50% range where it has been since last July. They have said a rate cut will likely wait until data shows inflation, after a stronger-than-expected run during the first quarter, is headed back down toward their 2% goal.
Fed officials have said that only an unexpected and meaningful weakening of the labor market could trigger a rate cut sooner than otherwise.
They have so far welcomed evidence of labor market cooling as a sign of a rebalancing that eases upward pressure on prices.
Attention on the U.S. labor market front turns now to the monthly jobs report for May, due out on Friday and expected to show the unemployment rate steady at 3.9%.
Financial markets are pricing in a first Fed rate cut in September, and traders are increasingly confident of a second rate cut in December.
A separate report out Tuesday showed orders for U.S.-manufactured goods increased for a third straight month in April, boosted by demand for transportation equipment.
Factory shipments rose for a third straight month to the highest since June 2022, the report showed, and the inventories-to-shipments ratio fell – further indications of strength in demand for manufactured goods.
Nondefense capital goods orders fell 1.6% while their shipments – which go into the calculation of the business spending on equipment component of gross domestic product – increased 2.3%.
—Ann Saphir, Dan Burns and Howard Schneider, Reuters