Job openings fall to pre-pandemic levels as US labor market continues to cool down

By Alicia Wallace, CNN

(CNN) — In the next four days, a fire hose of data will be unleashed, providing crucial snapshots of the US economy in advance of a pivotal election and a Federal Reserve meeting.

The first burst on Tuesday — a critical read on activity within the jobs market — showed that the once too-tight labor market is starting to look more like its pre-pandemic days.

There were an estimated 7.4 million unfilled jobs on the last day of September, a drop from August’s revised tally of 7.86 million openings, according to new data released Tuesday by the Bureau of Labor Statistics. The largest drop-offs in openings were in industries that have driven much of the job growth in recent years: health care and social assistance, and government, according to the report.

“I think the normalization of the labor market has continued to progress,” Eugenio Aleman, chief economist for Raymond James, told CNN.

Economists were expecting the number of job openings to land at around 7.9 million, declining from the prior month’s initial estimate of 8.04 million, according to FactSet estimates.

The decline in job openings reflects a labor market that has slowed back to a pre-pandemic pace after experiencing years of blockbuster growth: The rate of openings as a percentage of total employment mirrors what was seen throughout much of 2018 and 2019, BLS data shows.

“Decreasing or subdued job openings, quits and hiring rates last month all point to a cooler labor market compared to one year ago,” Elizabeth Renter, senior economist for NerdWallet, wrote in commentary issued Tuesday. “Employers aren’t bringing many folks on, and workers aren’t super eager to leave the comforts of their existing roles in the current environment.”

The latest Job Openings and Labor Turnover Survey (JOLTS) — which provides a sense of how much churn and movement there is in the job market — is the first major report to land in an economic data-heavy week.

And that data is going to be a bit muddy: The ongoing Boeing strike and Hurricanes Helene and Milton are expected to heavily distort jobs data starting with the month of October.

As it stands now, and accounting for the weather- and strike-related losses, economists are expecting that October’s job gains will be around 120,000 — half of what was seen in September (which was surprisingly strong), FactSet estimates show.

While the upcoming data may be temporarily noisy and choppy, the latest JOLTS report — which also tracks hires, quits, layoffs and other turnover activity — painted a straightforward picture of a cooling labor market.

At the end of September, the total number of hires rose to 5.56 million from 5.44 million and layoffs jumped to 1.83 million from 1.67 million. However, the rates of hires and layoffs as a percentage of overall employment remain within the levels seen during the solid employment expansion period in the decade before the pandemic.

The closely watched “quits rate,” which serves as both a gauge of employee confidence as well as an indicator of future wage growth, dropped to 1.9%. Outside of 2020, that’s the lowest quits rate since the summer of 2015, BLS data shows.

Still, it’s possible that Tuesday’s JOLTS report could partly reflect the effects of Hurricane Helene, which made landfall in Florida late September 26; and the Boeing strike, which began September 13, Julia Pollak, chief economist at ZipRecruiter, noted Tuesday.

“Specifically, hires may be temporarily depressed and layoffs overstated,” she wrote.

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