Job openings fell off dramatically in August, according to data released Tuesday from the Bureau of Labor Statistics. The numbers show that openings declined 10.1 million from the month prior — a possible sign that a historically tight labor market may finally be getting some slack.
Tempering the data, however, are numbers showing that quits, layoffs, and hires are holding steady. Total separations were stuck at around six million in August, while quits and layoffs remained around 4.2 million and 1.5 million respectively.
Quits notably are seen as a measure of worker power and thus tightness in the labor market overall. If quits remain high, that means workers still have leverage over their employers, which is usually related to the level of labor demand. In other words, your employer needs you more than you need them.
Layoffs or separations likewise serve as a measure of how easy it is for employers to hire workers, and the unchanged number suggests that the labor pool remains relatively tight.
The rate of hires also shows how quickly companies are refilling empty positions, and that number stayed roughly the same at 4.1 percent, or 6.3 million hirings.
What explains the drop-off in openings then? According to the federal data, some key sectors saw big drops. Openings in health care and social assistance, for example, fell 236,000, while retail trade fell 143,00. Both sectors had become well-known for their tight labor markets throughout the pandemic.
Most other sectors experienced at least some drop in openings, though there were a few notable exceptions. Construction, for example, saw its openings tick upward from 353 million openings to 407 million openings. This reflects the industry’s persistent labor shortages, which began well before the pandemic.
Some are interpreting the data as a sign that the Federal Reserve is on the right course when it comes to tightening financial conditions in the economy.
“Today's report shows they're on the right path toward taming the still-hot labor market. With another 125bps of rate increases expected before year end, and a softening economic backdrop, we expect further moderation in the labor market in Q4 before a recession in H1 2023 brings about a more marked change,” wrote Matthew Martin, U.S. economist for Oxford Economics.