US labor market softens as job openings dwindle and layoffs at highest level in over 2 years

  • Job vacancies fall by 384,000 in March; February revised upwards
  • Layoffs and dismissals rise by 248,000 to 1.8 million
  • Decline in job offers concentrated in small businesses

WASHINGTON, May 2 (Reuters) – U.S. job openings fell for a third consecutive month in March and layoffs hit their highest level in more than two years, suggesting some slowdown in the labor market that could help the Federal Reserve fight inflation.

Still, the labor market remains tight, with the Department of Labor’s monthly job vacancies and job rotation survey, or JOLTS report, Tuesday showing 1.6 vacancies for every unemployed person in March. It was the lowest reading since October 2021 and compared to 1.7 in February.

Fed officials, who began a two-day policy meeting on Tuesday, are closely watching the ratio, which remains above the 1.0 to 1.2 range that economists say is consistent with a market. employment that does not generate too much inflation.

The U.S. central bank is expected to raise its benchmark overnight interest rate another 25 basis points to the 5.00% to 5.25% range on Wednesday before potentially pausing its monetary policy tightening campaign next week. fastest since the 1980s.

“The decline in the vacancy-to-unemployment ratio over the past three months represents a reduction in excess demand for labor that will be welcomed by the Fed,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York. York.

“However, with the ratio still higher than at any time before November 2021, the labor market is still tight by historical standards.”

Job postings, a measure of labor demand, fell by 384,000 to 9.59 million on the last day of March, the lowest level since April 2021. Data for February has been revised rising to show 9.97 million job openings instead of the previously reported 9.93 million. Economists polled by Reuters had forecast 9.775 million job openings. They have fallen by 1.6 million since December.

March’s decline was concentrated in small businesses, those with 1 to 49 employees, the main drivers of phenomenal labor market growth. There were 144,000 fewer vacancies in the transportation, warehousing and utilities industry.

Job postings in professional and business services fell by 135,000. Retailers reported a drop of 84,000 vacancies. There were notable declines in health care and social assistance, but educational services reported 28,000 more job openings. There were 34,000 government jobs.

Job vacancies fell in all four regions, with steep declines in the Midwest and West. The job creation rate fell to 5.8%, the lowest since March 2021, from 6.0% in February.

Shares on Wall Street were trading lower as investors focused on a warning from Treasury Secretary Janet Yellen that the federal government could run out of cash within a month amid a stalemate to raise its $31.4 trillion borrowing limit. The dollar fell against a basket of currencies. US Treasury prices rose.


Hiring was little changed at 6.1 million, keeping the hiring rate unchanged at 4.0%. Economists had expected the slowdown in labor demand to be replicated in April’s jobs report, due out on Friday.

Nonfarm payrolls are expected to have risen by 179,000 jobs last month, the smallest gain since December 2020, after increasing by 236,000 in March, according to a Reuters survey of economists.

The JOLTS report showed layoffs jumped by 248,000 to 1.8 million, the highest level since December 2020. The increase was led by the construction industry, which cut 112,000 jobs. The decline likely reflects job losses in the housing market, which has been hammered by higher mortgage rates.

Accommodation and food services lost 63,000 jobs, while the health care and social assistance category saw 42,000 layoffs. Employment in the leisure and hospitality sector remains below pre-pandemic levels.

Professional and business services layoffs rose by 49,000. Small and medium-sized businesses accounted for the bulk of the layoffs. All four regions reported an increase in job losses.

The layoff and layoff rate rose to 1.2%, the highest since December 2020, from 1.0% in February.

With steadily declining job openings and increasing layoffs, fewer people are leaving their jobs voluntarily. Resignations fell to 3.85 million, the lowest level since May 2021, from 3.98 million in February.

Quits declined in the accommodation and food service sector. They fell in the South and West, but rose in the Northeast and Midwest.

Quit rates, which are considered a measure of labor market confidence, fell to 2.5% from 2.6% in February. It is down from the 2.9% to 3.0% range seen in late 2021 and early 2022, when the job jump was at its peak.

“Job opening and quitting rates remain historically high, and the layoff rate remains historically low, but all three are moving in the direction of a colder labor market,” said Michael Feroli, chief economist. American at JPMorgan in New York.

“Signs of a slowing labor market won’t be a game-changer for tomorrow’s Fed meeting, although they do suggest that the cumulative amount of policy tightening is starting to have the desired effect on labor demand. business work.”

Reporting by Lucia Mutikani; Editing by Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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