The number of job openings collapsed in August, a sign that the Federal Reserve’s campaign to raise interest rates to slow commerce and arrest inflation may be taking hold.
Openings across all sectors decreased to 10.1 million in August, down from 11.239 million the month before, according to data released on Tuesday by the Bureau of Labor Statistics. The record number of job openings was notched in March and upwardly revised to 11.9 million.
The largest decreases in job openings were in healthcare and social assistance, other services, and retail trade.
Total hires and separations changed little from the month before.
“Net, net, one of the strongest labor markets in history is finally starting to run out of gas, with job openings plummeting by over 1 million at the end of August,” said Chris Rupkey, chief economist at FWDBONDS. “Fed officials’ hopes and prayers for a soft landing looks more achievable now that business hiring is beginning to slow down and the ‘Help Wanted’ signs are being taken down from storefront windows.”
The numbers come as the Fed jacks up interest rates more aggressively and tightens its monetary policy to combat explosive inflation. The central bank raised rates by half a percentage point in May and then took the even more aggressive step of hiking rates by three-fourths of a percentage point in June, July, and September — the most ambitious upward hikes since 1994.
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The Fed’s action is designed to slow spending and eventually drive down prices. Some economists have argued the Fed isn’t moving fast enough and pointed to hot spots in the economy, such as the high number of job openings, as evidence.
The United States has had two quarters of negative GDP growth, with the economy contracting 0.6% in the last quarter — a sign that typically indicates a recession, although the robust job market has pushed back on that narrative.
The economy added 315,000 jobs in August, and the unemployment rate ticked up slightly to 3.7%, near a five-decade low and around the ultralow level it was at right before the pandemic.
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All eyes will be on Friday’s release of the September employment report to see to what extent the central bank’s rate hikes have been taking a toll on the labor market.
A strong reading is likely to bolster the Fed’s resolve in conducting the mammoth rate hikes, while a soft reading would raise concerns among some economists that a recession is right around the corner.
