East Moriches, N.Y.: Photo of a help wanted sign displayed in the front window of the Moriches Bay Deli in East Moriches, New York, on January 7, 2022.
Steve Pfost/Newsday RM/Getty Images
Job openings plummeted to 10.1 million in August from 11.2 million the previous month.
Quitting held steady, signaling the Great Resignation could be part of the new economic normal.
The report offers a clear sign the labor market is cooling off after extraordinary job creation.
Companies are a little less eager to hire you, but they know you’re still probably going to quit — and they don’t want to let you go before you leave on your own.
Job openings in the US tumbled to 10.1 million in August, according to Job Openings and Labor Turnover Survey, or JOLTS, data published Tuesday morning. That landed below the median estimate of 10.8 million openings from economists surveyed by Bloomberg. It also marks a massive decline from July’s revised count of 11.2 million and reflects the lowest number of openings since June 2021.
The one-month decline of 1.1 million openings is also the largest since the first months of the pandemic, when widespread lockdowns and the onset of a severe recession led companies to rapidly scale back their hiring plans. The plunge signals firms are bracing for another slowdown in economic activity, and that the extraordinary job creation seen over the past two years will soon fade.
“Talk about dramatic decline!” Nick Bunker, economic research director at Indeed Hiring Lab, told Insider. “They haven’t seen anything of this size really over one month, outside of spring of 2020.”
That’ll be a welcome sign for the Federal Reserve. The central bank has highlighted intense demand in the labor market as a factor that could keep inflation high, and has signaled that some softening in the job market is needed to bring the economy to a healthy state. Bunker said it aligns with the narrative of the labor market right now — it’s still tight, but getting a little bit looser. The Tuesday print shows such softening taking place and should give the Fed some confidence that rising interest rates are cooling labor demand.
“When they saw this number, I’m sure there was several people at the Fed board who were fist pumping or maybe even a few high fives,” he said.
Openings fell the most in the health care and social assistance sector, with businesses shedding 236,000 listings in August. Other services, which includes repair firms, laundry services, and religious services, followed with a decline of 183,000 openings. Retailers slashed 143,000 openings.
The overall drop in openings isn’t solely due to those roles being filled. Total hires rose only slightly to 6.3 million, and the hiring rate went unchanged through the month. The data backs up signals first presented in the August jobs report, which showed hiring easing up slightly but still surpassing the pre-pandemic average.
While the drop is the largest in years, the labor market remains historically imbalanced. There were only 0.6 available workers for every opening in August, or nearly two openings for every unemployed American, according to the report. The reading snapped a five-month streak during which the ratio sat at 0.5, but is still well below the pre-crisis average of 0.8.
At the same time, Americans showed once again that the Great Resignation is a new way of life — or at least a part of the labor market that refuses to fade. In August, 4.2 million people quit. That means 2.7% of the workforce felt comfortable leaving their jobs. Quits are still near a record high that’s been continually pushed up over the past year.
“It’s still very much a job seeker’s labor market, just not as much as it was a few months ago,” Bunker said.
Quits were particularly concentrated in leisure and hospitality in August. That’s not surprising for the sector, where workers have been leaving at high rates every month, likely in part to low wages and poor conditions.
But sectors like construction and transportation, warehousing, and utilities also saw a spike in workers leaving. Bunker attributes that to a potential new type of quitting in goods-related sectors.
“Construction is now the sector that’s seen the largest increase in its quits rate since the pandemic started.” Bunker wrote in a tweet that looked at how August 2022 quit rates compare to February 2020 rates.
That high quits rate might go hand in hand with just how little employers want to let their workers go. While some industries are seeing mass layoffs in this cooling economy, it’s not a widespread trend. The layoffs rate stayed low in August, hovering near series lows — and at just about the same level as a year ago.
There isn’t any sign of layoffs picking up, Bunker said, and the rate is heading into its eighteenth month of staying under pre-pandemic lows.
“You’re still probably having workers leaving at a sustained rate, so you really want to hold on to the workers that you do have,” Bunker said. “If it’s tough to bring people in, you definitely don’t want to let people go.”