U.S. job openings down in October, but remain high
U.S. job openings dropped in October but remained high, a sign that businesses became slightly less needy for workers as the Federal Reserve ramps up interest rates in an effort to cool the economy.
Employers posted 10.3 million job vacancies in October, down from 10.7 million in September, the Labor Department said Wednesday. Even with the drop, openings were slightly lower in August, when they dipped below 10.3 million before rebounding in September.
The number of people quitting their jobs also slipped in October, to 4 million from 4.1 million.
The Fed is closely monitoring the figures on job openings and quits for signals about the strength of the job market. The Fed is seeking to pull off a delicate task by slowing hiring and the broader economy to cool inflation but not so much as to cause a recession.
While more job openings benefit those seeking work, Fed officials want to see the number of openings fall. That’s because fewer openings indicate less competition between businesses to find and keep workers, reducing pressure on rising wages.
The number of open jobs dropped last month in construction, manufacturing, professional services such as architecture and engineering, and health care. Jobs rose in financial services and remained high for restaurants, bars and hotels.
“The labor market is cooling, but it is far from cold,” Jennifer Lee, an economist at BMO Capital Markets, said in an email.
Fed officials also want to see the number of people quitting decline. When workers quit, they typically do so for a new, higher-paying job. Since the covid-19 pandemic, people who have left one job for a new one have been getting historically large wage increases.
Many businesses then pass on the higher labor costs to customers through price increases, fueling inflation.
The Fed is keen to slow — although not eliminate — wage gains, so it is hoping that its rate increases will bring down the number of jobs that companies advertise.
The Fed has lifted its benchmark interest rate six times this year to a range of 3.75% to 4%, the highest in about 15 years, in a bid to quell rampant inflation. Prices have soared 7.7% in the past year, according to the Labor Department’s consumer price index.
The Fed typically seeks to slow price increases — with an overall inflation goal of 2% — by weakening the economy and pushing up unemployment, which reduces spending and often brings down inflation.
However, with job openings so high — they hit a twodecade record of 11.9 million in March — many Fed officials hope they can bring down wage increases and inflation by sharply reducing openings, without causing layoffs to rise significantly.
Many economists are skeptical that such an approach can succeed, because historically layoffs have also risen when job openings have gone down.
Wednesday’s report — known as the Job Openings and Labor Turnover Survey — provides greater detail about the labor market, while the monthly jobs report released Friday includes the unemployment rate and the number of jobs added or lost each month.