Job openings in March fell to 9.6 million, the Labor Department reported on Tuesday, the lowest level in two years and a further indication that the once red-hot labor market is gradually cooling. The total number of open jobs per available unemployed worker, a ratio that the Federal Reserve has been watching as it tries to tame rapid inflation, decreased slightly to 1.6, the lowest level since October 2021.
Layoffs, which have remained historically low outside of some big-name companies in the tech sector, rose to 1.8 million in March. The number of workers voluntarily leaving their jobs was relatively unchanged.
Why It Matters: Key Data for the Fed
The report released on Tuesday, called the Job Openings and Labor Turnover Survey, or JOLTS, is one of many that the Federal Reserve watches closely each month to gauge its efforts to slow the economy and ease inflation without spurring widespread layoffs.
The Fed has been raising interest rates for more than a year as it tries to bring down rapid inflation to its target of 2 percent. It will announce its next decision on Wednesday; officials are widely expected to raise rates by a quarter percentage point, to just above 5 percent. The JOLTS report is the last major piece of data that Fed policymakers will see before their decision.
In particular, they are interested in the number of open jobs per available unemployed worker, which has remained stubbornly high for months. That mismatch has helped to drive up pay and contributed to inflation. More recently, however, the ratio has been declining — a welcome sign for the Fed that underscores the labor market’s gradual slowdown.
Officials also track other details in the report, including the number of layoffs and workers who quit their jobs voluntarily. When more people quit their jobs, it signals that workers are finding opportunities to switch to better-paid positions, or are confident they can do so.
The Background: Labor Market Strength
Month after month, the labor market has remained robust, defying expectations and complicating the Fed’s efforts to cool the economy. The latest evidence came on Friday, when government data showed that wages and salaries for private-sector workers were up 5.1 percent in March from a year earlier, the same growth rate as in December.
Still, higher interest rates are taking a toll on the job market — albeit gradually. Employers added 236,000 jobs in March, a healthy number but down from an average of 334,000 jobs added over the prior six months. The year-over-year growth in average hourly earnings also fell to its slowest pace since July 2021.
What’s Next: The April Jobs Report
The report on Tuesday kicked off a big few days for economic news.
In addition to the Fed decision on Wednesday, there will be the Labor Department’s monthly snapshot of the employment situation on Friday. The report, based on April data, will provide a clearer and more up-to-date picture of the labor market, including the change in the number of jobs — a figure that has been positive for 27 straight months — and the unemployment rate.
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