Job Openings Dropped in October but Remain High
The U.S. Bureau of Labor Statistics (BLS) recently released its October Job Openings and Labor Turnover Summary. The month’s reported number of job openings decreased by 353,000 to 10.3 million as the Federal Reserve (Fed) increased interest rates in an effort to cool the labor market. October’s number of job openings is down 760,000 compared with a year ago, resulting in 1.7 job openings for each unemployed worker. This is still above the pre-pandemic job opening levels of 1.2.
Even with October’s drop in job openings, down from 10.7 million in September, the number remains high. Job openings are not decreasing as fast as the Fed would like. The number of job openings is viewed as an indication of the strength of the labor market and the broader economy. The Fed wants labor demand to drop faster to reduce the upward pressure on wages that is contributing to high inflation.
The job openings rate changed little; now at 6.3%, it is one percentage point below the peak reported in March. Notably, the largest decrease in job openings was in state and local government, nondurable goods manufacturing and federal government. Other industries—including finance, insurance and other services—reported increases in job openings.
The number of total employee quits fell slightly to 4 million, down 34,000 from last month. While the number of employee quits is still unusually high, it’s lower than the record 4.5 million in November 2021. Quits have now topped 4 million for 16 months in a row. October’s report revealed the employee quit rate held among private sector workers is at 2.9%.
Total separations increased to 5.7 million, but the rate was unchanged at 3.7%. Layoffs and discharges increased by 58,000 to 1.4 million, but the rate remained unchanged at 0.9%. While total layoffs remained relatively low in October, they edged up in the information sector as the technology and media industries announced broad layoffs.
Employer Takeaways
The Fed raised interest rates in an attempt to slow hiring and the broader economy to cool inflation without causing a recession. October’s high number of job openings and employee quits suggests that the labor market is still extremely tight. Larger drops in these numbers would be seen as evidence the job market is softening, which would allow the Fed to raise interest rates more slowly to counter inflation.
The Fed’s actions are likely intended to drop the number of job openings further; fewer openings would indicate less competition between employers to attract and retain employees, reducing employer pressure to increase wages. However, October’s report suggests that workers still feel confident to switch jobs due to the high number of job openings despite inflation. As a result, employers continue to struggle attracting and retaining workers. This has resulted in increased labor costs for employers as they raise wages and offer competitive benefits to attract talent. Employers should continue to monitor employment trends to stay competitive in today’s evolving market.
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