The number of job openings in the U.S. unexpectedly fell in September to the lowest level since January 2021, suggesting that the labor market is continuing to ease.
Job openings declined by 418,000 to 7.443 million by the last day of September, the lowest level in over three and a half years, the Labor Department’s Bureau of Labor Statistics said Tuesday in its Job Openings and Labor Turnover Survey, known as the JOLTS report.
Economists polled by Reuters had forecast 8 million job openings. Hires increased by 123,000 to 5.558 million, while layoffs rose by 165,000 to 1.833 million.
“The September JOLTS report points towards continued labor market cooling, with notable drops in job openings and quits, and a sizable uptick in layoffs,” Julia Pollak, chief economist at ZipRecruiter, told FOX Business.
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“Workers’ leverage in the job market has eroded significantly, with the labor leverage ratio (the ratio of quits to layoffs) dipping below pre-COVID levels for the first time since the pandemic recession, and falling about 50% since the peak of the Great Resignation,” she added.
The August data was also revised down to show 7.861 million unfilled positions instead of the previously reported 8.04 million job openings.
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The JOLTS report leads off a lineup of several notable labor market reports due to be released this week, with ADP’s private sector payrolls report scheduled to be released on Wednesday and the Labor Department’s September jobs report on Friday.
A Reuters survey of economists forecasted that Friday’s jobs report is likely to come in at 115,000 in October after a surprisingly strong 254,000 jobs were added in September.
That would leave October’s jobs report as the smallest in six months, adding to the case for the Federal Reserve to continue lowering interest rates.
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The Fed’s policymaking arm, the Federal Open Market Committee, meets next week and is due to release its next decision on Thursday after it cut interest rates in September for the first time in four years. Markets currently expect the Fed to cut rates by 25 basis points after a larger-than-usual 50-point cut in September.
“The JOLTS report suggests that the Fed should not be deterred from proceeding with rate cuts on the basis of a stronger-than-expected jobs report. It should remain focused on risks to the labor market, and cautious in the face of relatively weak JOLTS data,” Pollak said.
“Falling quits are consistent with downward pressure on wage growth and continued disinflation – a fact that Fed governors will no doubt keep in mind when they meet next week,” she added.
Reuters contributed to this report.
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