US Job Openings at Lowest Since February 2021, Fall 33 Percent in Past Two Years
US Job Openings at Lowest Since February 2021, Fall 33 Percent in Past Two Years

By Naveen Athrappully

Job openings in the United States declined in April to hit the lowest level in more than three years, with the decline likely to play a role in the Federal Reserve’s decision to cut interest rates.

Nonfarm job openings in April dropped by 296,000 month over month to 8.05 million, data from the U.S. Bureau of Labor Statistics (BLS) show. Since April 2023, job openings have declined by more than 1.8 million.

“Job openings decreased in health care and social assistance (-204,000) and in state and local government education (-59,000) but increased in private educational services (+50,000),” the jobs report said.

The 8.05 million openings figure is the lowest since February 2021, when it was 7.81 million. Since hitting a peak of 12.18 million in March 2022, job openings have declined by more than 33 percent.

There were 0.8 unemployed individuals per job opening in April, an improvement from the 0.5 figure in April 2022. A lower number indicates a tighter job market and wage growth, thus fueling inflation. A higher figure indicates enough people are available to fill jobs.

A cooling labor market is a crucial consideration for the U.S. Federal Reserve as it decides when to initiate interest rate cuts.

The market was expecting the Fed to start cutting rates in 2024, given lower inflation. However, this hasn’t happened yet.

The Fed raised interest rates from 0.25 percent in March 2022 to a range of 5.25 to 5.50 percent in July 2023, and rates have remained at that level until now. The next Fed meeting is scheduled for June 11–12.

While yearly job openings declined, the number of hires and total separations were “little changed,” the BLS noted.

Commenting on BLS numbers, author and CFA Andrea Lisi pointed out on social media that it was “all about employment now.”

“If companies hold on to workers, the US Economy can chug along, but if the unemployment rate spikes, the US Consumer will rapidly retrench, and the economy will slow down non-linearly, potentially leading to a recession,” Mr. Lisi said.

“There are two potential scenarios for the US Economy: a hard landing, characterized by a sudden and severe economic downturn, or a no-landing scenario, where the economy manages to maintain a stable course. A soft landing, I believe, is unlikely in the current economic climate.”

US Economic Projections

The most recent U.S. Leading Economic Index data showed that the index continued to decline in April, suggesting “softer economic conditions” ahead for the U.S. economy.

Justyna Zabinska-La Monica, senior manager at The Conference Board, pointed out “serious headwinds” to growth, with elevated inflation, high interest rates, rising household debt, and depleted pandemic savings expected to weigh on the U.S. economy this year.

“As a result, we project that real GDP growth will slow to under 1 percent over the Q2 to Q3 2024 period,” she said.

However, not everyone has a negative view of the economy.

“The US economy continues to surprise to the upside,” Deloitte said in a March report. “Deloitte’s baseline forecast remains optimistic.”

The firm expects U.S. consumer spending, investment, and government spending to grow by at least 2 percent this year and exports by 4 percent.

It predicts the Fed will cut interest rates twice in the second half of 2024. Job growth may slow while the unemployment rate is projected to peak at 3.9 percent before gradually declining because of “persistently tight labor markets,” according to the company.

“Despite an expected slowdown in the coming quarters, we expect the US economy to post real growth of 2.4 percent this year and 1.4 percent in 2025,” Deloitte said.

On May 30, the U.S. Bureau of Economic Analysis said that the first quarter GDP grew by 1.3 percent, down from the 3.4 percent growth in the fourth quarter of 2023.

Layoffs in 2024

According to a May 2 report by global outplacement firm Challenger, Gray & Christmas Inc., U.S. companies announced 322,043 job cuts in April. That was only 4.6 percent lower than the year-earlier period, suggesting that employers still see job reductions as crucial.

“The labor market remains tight. But as labor costs continue to rise, companies will be slower to hire, and we expect further cuts will be needed. This low April figure may be the calm before the storm,” said Andrew Challenger, senior vice president at the firm.

Searching for jobs is taking longer than usual. In the first quarter of 2024, the average job search lasted 3.05 months, higher than 2.71 months in the same quarter a year back.

Cost-cutting was found to be the No. 1 reason for layoffs this year, accounting for more than 73,000 terminations. That was followed by “restructuring” plans at various firms.

U.S. employers announced plans to hire 9,802 workers in April, which the report notes was the lowest total for the month going back more than a decade to April 2013.

“For the year, employers have announced plans to hire 46,597 workers, the lowest total in the first four months of the year since 2016, when 38,445 hiring plans were recorded,” the May 2 report states.

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