US Job Openings in March Reach Lowest Level Since Early 2021

In March, job openings in the United States declined to their lowest level in more than three years. Despite this decrease, the numbers remained historically high, indicating the job market’s resilience despite rising interest rates.

According to the Job Openings and Labor Turnover Survey on Wednesday, employers posted 8.5 million job vacancies in March, down from 8.8 million in February, marking the lowest count since February 2021.

The number of Americans voluntarily quitting their jobs also dropped to its lowest since January 2021, suggesting waning confidence in finding better opportunities. However, layoffs decreased.

While monthly job openings have significantly decreased from their peak of 12.2 million in March 2022, they continue to remain high. Prior to 2021, job openings had never exceeded 8 million, a threshold that has now been maintained for 37 consecutive months.

The persistent high level of job openings underscores the robustness of the US labor market. Despite the Federal Reserve’s series of interest rate hikes starting in March 2022 to counter rising inflation, the economy continued to grow, businesses continued to hire, and unemployment remained low, staying below 4% for 26 consecutive months—the longest streak since the 1960s. Employers have been adding an average of 276,000 jobs per month this year, up from 251,000 last year. The April jobs report expected on Friday is anticipated to show an additional 230,000 jobs added last month, a slight decrease but still a solid figure, according to forecasts by FactSet.

Inflation has also moderated, declining from a 9.1% high in June 2022 to 3.5% in March. This combination of declining inflation and ongoing economic strength has raised hopes that the Fed can engineer a “soft landing,” slowing down the economy sufficiently to curb inflation without causing a recession. Some economists even argue that a landing may not be necessary, suggesting that the economy can sustain steady growth as inflation subsides.

However, progress on inflation has recently stalled. Consumer price increases have not declined on a month-to-month basis since October, and on a year-over-year basis, they remain well above the Fed’s 2% target.

Although the Fed had previously signaled its intention to cut rates three times this year, the disappointing inflation figures suggest that the central bank is not in a rush to act. It is expected to keep rates unchanged at its meeting on Wednesday.