U.S. Job Openings Drop to Lowest Level Since February 2021

The number of job openings in the United States dropped to the lowest level in more than three years in April, further indicating that the U.S. labor market is cooling off. According to the latest Job Openings and Labor Turnover Survey (JOLTS), 8.06 million positions remained unfilled on the last business day of April, the lowest reading since February 2021 2021 and significantly lower than the consensus estimate of 8.36 million job openings.

At the same time, the unemployment level edged up to slightly to 6.49 million in April, meaning there are now roughly 1.24 unfilled positions for every job seeker in a clear sign that the imbalance between labor demand and supply, identified by the Fed as one of the factors driving inflation, is gradually easing. Before the pandemic hit in March 2020, there had been 1.2 job openings per unemployed person in an already tight labor market. That indicator then crashed to 0.2 by April 2020 amid mass layoffs in sectors affected by Covid restrictions before climbing as high as 2.0 job openings per unemployed person in March 2022, at the height of the "Great Resignation". The current rate of 1.24 job openings per job seeker is the second lowest since June 2021, when more than 10 million job openings stood opposite 9.5 million unemployed people.

Fed Chair Jerome Powell has repeatedly stressed that the labor market needs to balance out to relieve upward pressure on wages and thus cool inflation. In recent months, both CPI inflation and the Fed's preferred PCE inflation measures have proven stickier than many had hoped, dashing Wall Street's hopes of a first rate cut in the first half of the year. According to CME FedWatch Tool, markets have pretty much written off rate cuts for the Fed's June and July meetings, but are still hopeful for a first rate cut in September.