Job openings fell below 10 million in February for the first time in nearly two years, in a sign that the Federal Reserve’s efforts to slow the labor market may be having some impact.
Available positions totaled 9.93 million, a drop of 632,000 from January’s downwardly revised number, the Labor Department reported Tuesday in its monthly Job Openings and Labor Turnover Survey. Wall Street had been looking for 10.4 million, according to FactSet.
It was the first time vacancies fell below 10 million since May 2021.
The Fed has targeted the red-hot labor market in its quest to bring down inflation, which had been running at a 41-year high in the summer of 2022. The central bank has raised benchmark interest rates nine times since March 2022, but those moves had been appearing to have little impact on the jobs situation.
Prior to the February data, job openings had been outnumbering available workers by nearly 2 to 1. The latest figures bring that ratio down to less than 1.7 to 1.
Treasury yields fell following the release as the data could help dissuade the Fed from further rate hikes. Stocks moved lower.
“The labor market is starting to loosen as the number of job openings declined in most sectors. 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,” said Jeffrey Roach, chief economist at LPL Financial. “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.”
Though the numbers run a month behind, the Fed watches the JOLTS data closely for signs of labor slack.
Along with the decline in job openings, hires and separations also decreased slightly. Quits, a sign of labor confidence in the ability to switch jobs, rose by 146,000 to just over 4 million.
Professional and business services saw a slide of 278,000 job openings on the month, while trade, transportation and utilities decreased 210,000. Accommodation and food services, an important sector to gauge consumer demand, dropped 125,000.
On the positive side, there were 129,000 new construction jobs available, though that was the only category that saw a noticeable bump.
The JOLTS release comes three days ahead of fresh nonfarm payroll numbers for March. The Friday Labor Department count is expected to show a gain of 238,000, with the unemployment rate holding steady at 3.6%.