U.S. Job Openings Drop to Lowest Level Since March 2021

The number of job openings in the United States dropped below 9 million for only the third time since March 2021 in November, further indicating that the U.S. labor market is cooling off. According to the latest Job Openings and Labor Turnover Survey (JOLTS), 8.79 million positions remained unfilled on the last business day of November, the lowest reading since March 2021 and slightly lower than the consensus estimate of 8.85 million job openings. Last month, the Bureau of Labor Statistics had reported that job gains had slowed to the lowest level since January 2021 in October, although that number came with the caveat that it was affected by the autoworker strike, which led to a decline in manufacturing jobs.

At the same time, the unemployment level edged down to 6.29 million in November, meaning there are now roughly 1.4 unfilled positions for every job seeker in a clear sign that the imbalance between labor demand and supply, identified by the Fed as one of the factors driving inflation, is gradually easing. Before the pandemic hit in March 2020, there had been 1.2 job openings per unemployed person in an already tight labor market. That indicator then crashed to 0.2 by April 2020 amid mass layoffs in sectors affected by Covid restrictions before climbing as high as 2.0 job openings per unemployed person in March 2022, at the height of the "Great Resignation". The current rate of 1.4 job openings per job seeker is the second lowest since August 2021, when almost 11 million job openings stood opposite 8.3 million unemployed people.

Fed Chair Jerome Powell has repeatedly stressed that the labor market needs to balance out to relieve upward pressure on wages and thus cool inflation. The fact that inflation has come down notably despite the labor market remaining relatively strong has fueled hopes of a soft landing. The continued downward trend in November job openings further is adding to these hopes, even if the larger-than-expected increase in employment in December has reduced the likelihood of a timely rate cut.