US job openings hit three-year low

Jobs available for Americans fell by hundreds of thousands in April to their lowest level since 2021 in what analysts say is a return to normal for the U.S. labor market after the turbulence seen during the pandemic.

Between March and April, job openings fell by nearly 300,000 to about 8.06 million, data from the U.S. Bureau of Labor Statistics showed on Tuesday. Compared to the same time a year ago, there were 1.8 million fewer roles available for workers.

Meanwhile, hiring slowed. On a monthly basis, there were 23,000 new hires to 5.64 million, but this was 311,000 fewer new hires on a yearly basis. But Americans are also quitting their jobs, with 98,000 more workers leaving their jobs in April compared to the prior month. At the same time, layoffs ticked up slightly by 62,000 to 1.384 million for the month but was lower than a year ago when paid off Americans hit 1.53 million.

The American jobs market was hit hard during the pandemic as millions of workers lost work amid lockdown rules that brought the economy down to a halt and pushed the unemployment rate to nearly 15 percent. The reopening of the economy sparked hiring and created job opportunities across the labor market, sending employees scrambling for talent which helped push up wages and offering workers the ability to choose the kind of work they wanted to do.

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But amid soaring inflation and the Federal Reserve hiking rates to slow price increases, there are signs that the labor market is moving away from the volatility of the post-pandemic period, economists say.

“More than four years after the pandemic transformed the U.S. labor market, its balance of supply and demand is back to normal,” Bill Adams, chief economist at Comerica, said in a note shared with Newsweek.

Certain sections of the economy, such as physically strenuous work, are still seeing demand for workers. But other areas, like white-collar industries, have seen some cooling.

“This is a normal job market. It’s not as easy for job seekers to find a new job as two years ago, and it’s not as hard for employers to stay fully staffed,” Adams pointed out.

Julia Pollak, ZipRecruiter’s chief economist, noted that the report offered a mixed view of the labor market.

“While the decline in job openings…suggests softening demand for workers, the increase in hires and quits implies quite the opposite—resilient demand and plentiful opportunity,” she said in a note shared with Newsweek. “Meanwhile, layoffs across the economy remained historically low, suggesting that workers continue to enjoy an unusual degree of job security.”

Compared to a period before the pandemic, job openings were 15 percent higher than they were in February 2022, while job quitting remained unchanged. Hiring was 6 percent higher while layoffs were 23 percent lower.

The health care sector has been powering the jobs market over the last year. Openings in this sector were up 35 percent and hiring was also higher by 19 percent, adding 750,000 new workers.

“It is a sector where workers and job seekers have retained much of the leverage they gained during the pandemic, where jobs are unlikely to be automated, and where demographic trends suggest that hiring will remain strong in the coming decade,” Pollack said.

Implications for the Federal Reserve

At the height of a hot labor market in 2022, policymakers were nervous that employees’ ability to leverage their strength and demand higher pay may accelerate inflation. The central bank has been trying to cool soaring price increases and has tightened monetary conditions through a hike in borrowing costs that now sit at their highest in more than two decades.

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The April job openings data suggested a slowing jobs market to a level where fears over wages getting out of control appear unlikely, according to Comerica’s Adams.

“Most labor indicators are pointing to a considerably cooler job market now. That’s why [Fed] Chair Powell took it in stride when inflation accelerated in the first half of the year, saying that further interest rate hikes were unlikely,” he said. “Wage growth is likely to moderate further in the second half of 2024 as slower turnover in the workforce translates into fewer workers getting big wage increases in new jobs.”

The Fed has kept the rate at the same current range of 5.25 percent to 5.5 percent since the summer of 2023. They have suggested that they would keep borrowing costs elevated for as long as inflation stays above the central bank’s target of 2 percent. The rate of price increases has stubbornly refused to fall to that level.

But some analysts said on Tuesday that the labor market’s performance was a good sign for the trajectory of inflation and what that could mean for rates.

“Job openings have returned to pre-pandemic levels, which is good news on the inflation front,” Jamie Cox, Managing Partner for Harris Financial Group, said in a note. “Higher for longer wears thin if the labor market gets much weaker.”

Jeffrey Roach, the chief economist for LPL Financial, pointed out that the openings-to-unemployed ratio declined to 1.24.

“[It is] matching pre-pandemic levels and revealing a loosening labor market,” he said in a note. “This metric was specifically called out by Chairman Powell in his warnings about a tight labor market. But now, investors should likely see some easing in wage growth in the coming months. Overall, this report suggests wages will not likely create inflationary headwinds throughout the balance of 2024.”