The number of job openings in the United States in April showed a decrease, which turned out to be more significant than the preliminary expectations for the dynamic of the corresponding indicator.
The number of job openings, which reflects the level of demand for labor, was down 296,000 to 8.059 million on the last day of April. This result is the lowest since February 2021. The relevant information on Tuesday, June 4, was published by the Labor Department’s Bureau of Labor Statistics in its Job Openings and Labor Turnover Survey, or JOLTS report.
The April result is evidence of cooling in the United States labor market. This circumstance may contribute to the Federal Reserve’s fight against inflation.
According to FactSet estimates, economists had expected job openings to reach 8.36 million in April in the United States. In the mentioned month, there were approximately 1.2 available jobs for every job seeker. The BLS data indicates that the specified figure is the lowest since June 2021.
It is worth noting that over the past two years, the United States labor market has demonstrated what can be called historical strength. Against this background, a solid platform has been formed for the growth of consumer spending. Citizens had a financial reason to ask such a question as, for example, whether is now a good time to buy a car. Against this background, circumstances favorable for the positive dynamics of the US economy were formed, despite such negative factors as rising inflation and high interest rates.
It is worth noting that in April, in addition to the decline in job openings, other indicators of labor turnover showed minimal changes. The quits rate, which measures the percentage of such voluntary decisions from total employment, has remained stable for the sixth month in a row, standing at 2.2%. The total number of layoffs in April increased to 3.51 million from 3.41 million in March. This figure is currently the lowest since December 2022.
Nancy Vanden Houten, lead US economist at Oxford Economics, in a note published on Tuesday, says that the decline in opening points indicates a slowdown in the pace of hiring in the months ahead.
The United States labor market has experienced one of the best periods in its history as part of the recovery process after the coronavirus pandemic. Over time, the positive momentum weakened. This tendency became especially evident in April. According to initial BLS estimates, only 175,000 new jobs were added in the United States in the mentioned month.
Slowing down the pace of job growth may bring the US labor market closer to the level seen before the coronavirus pandemic. At the same time, this tendency may mean that, in general, the intensity of economic growth is beginning to fall. As part of the fight against high inflation, the Fed seeks to see demand soften and slow down price increases. After achieving these goals, the financial regulator of the United States is ready to begin easing monetary policy, which implies cutting interest rates.
In April, the pace of price growth in the US slowed to 3.4%. Nancy Vanden Houten says that the Fed will welcome signs of cooling in labor market conditions, but the JOLTS data does not negate confidence that the financial regulator will keep the cost of borrowing at the current level until September. The expert also noted that the April inflation data are encouraging, but the central bank of the United States needs to get a positive result for more than one month.
It is worth noting that the number of US job openings still remains above the level observed before the coronavirus pandemic, exceeding about 1.09 million the indicator of February 2020, and 3.55 million the average figure from December 2000 to February 2019. At the same time, it is important that the current configuration of the labor market differs significantly from the state of affairs that was relevant 10 or 20 years ago. Labor force participation rates are declining due to demographic changes, mainly related to the aging of Baby Boomers, and against the background of the consequences of the coronavirus pandemic, which include premature retirement, high mortality, and the need for ill person care.
