America isn’t taking down all of its “help wanted” signs just yet — but they are slowly starting to disappear.
The number of available jobs in the United States dropped in February to 9.93 million, the lowest number since May 2021, according to data released Tuesday by the Bureau of Labor Statistics.
That’s lower than the downwardly revised 10.56 million reported for January, according to the latest Job Openings and Labor Turnover Survey.
Economists were expecting 10.4 million available positions, according to Refinitiv.
“The job market peaked early in the year,” Mark Hamrick, senior economic analyst with Bankrate, told CNN in an interview. “Some of the steam is starting to come out of the job market, and we’ll likely see that both in hiring slowing down and probably a slower increase in the unemployment rate in the coming months.”
The industries with the largest declines in job openings were professional and business services, health care and social assistance, and transportation, warehousing and utilities, according to the BLS.
The February JOLTS report showed that the number of new hires decreased to 6.1 million from 6.3 million, layoffs fell to 1.5 million from 1.7 million, and quits grew to 4 million from 3.9 million. Workers in southern states such as Florida, Texas, and Georgia accounted for most of the quits, said Chris Rupkey, chief economist of FwdBonds.
With the latest decline in open positions, the labor market is now showing a little more slack. The number of available jobs per job seeker is now fewer than 1.7, down from nearly 1.9.
During the past two month, openings have decline by 1.3 million, noted Nick Bunker, head of economic research for the Indeed Hiring Lab.
“The US labor market is definitely cooling off,” he said in a statement. “At this rate, we’d return to a pre-pandemic level of openings by this summer.”
In February 2020, there were just shy of 7 million openings, according to the BLS.
The labor market has remained historically tight during a time when the Federal Reserve is engaging in a heavy-handed effort to bring down inflation through a series of interest rate hikes.
While Fed officials have said repeatedly that they’re not seeing substantial evidence of a wage-price spiral — a cycle where higher wages push up prices due to increased demand for goods, which then pushes up the desire for higher wages — they’ve also expressed concern about the potential for labor market tightness to put upward pressure on inflation.
“If that [wage-price spiral] were to begin, that’s very difficult to put back in the would-be bottle after the fact,” Hamrick said. “In trying to essentially dampen demand for workers through higher interest rates — a rather inelegant tool to try to achieve that result — they’re just trying to manage that risk.”
“Sometimes they’re good at that,” he said of Fed policymakers. “And sometimes they aren’t. But I think they would look at this data as well as some other evidence around the job market and say, ‘Well, at least maybe we’re on a path that’s more to our liking, with respect to dampening an inflation pressure.”
Certain areas of the economy — notably housing, manufacturing and technology — have shown some slowing during this time of rapidly increasing interest rates, growing uncertainty and shifts in consumer spending patterns from goods to services. In recent months, dozens of large employers across the United States have announced mass layoffs; however, those declines have been more than offset by growth in other areas of the labor market.
“The labor market for the first time looks like it is starting to move into better balance, as well it should with major US corporations announcing cutbacks in the thousands almost nearly every day,” Rupkey said.
The JOLTS data shows labor turnover movement that occurred before the collapse of Silicon Valley Bank roiled the banking industry.
“This sets up a dangerous situation where tighter credit conditions could prompt actual layoffs in the months ahead as corporations struggle to get costs under control,” Rupkey said.
Additional data on labor market trends will be released later this week, including ADP’s private-sector payrolls, a report on recent job cut totals, weekly first-time unemployment claims and the government’s closely watched monthly jobs report.