When you use a pressure cooker, it can take an annoyingly long time after your dish is done cooking for the pot to cool to the point where you can safely open the lid. And so it is with the U.S. job market.
The evidence that the labor market has moved past its overpressurized 2021-2022 levels continues to mount, but it is remarkable that it has remained this hot for this long.
- Indeed, the latest data out Wednesday morning reveal a job market that is decisively cooling, yet also better by many measures than it ever was in the years before the pandemic.
- The Job Openings and Labor Turnover Survey shows the number of job openings fell by 325,000 in March, while the number of people hired fell by 281,000.
- The number of people voluntarily quitting their jobs also fell, by 198,000, a signal of less confidence among would-be job-hunters.
This data — especially when you look at not just the single month but the trend over the last year — points to a job market that is coming into balance, yet doing so gradually and with minimal layoffs.
- The report showed that the number of layoffs and discharges fell by 155,000. That amounts to 1% of total employment, down from 1.1% in February and only a tick above the all-time low of 0.9%.
Fed officials have often cited the ratio of job openings to unemployed workers as an indicator of just how tight the labor market really is, and this data series tells the story.
- In March, there were 1.32 job openings for every unemployed American. That's down from 2.03 in March 2022, when labor shortages were at their peak.
- But the March ratio is still higher than it ever was before the pandemic; the previous all-time high was 1.24 (the data goes back to 2000).
- Essentially, the numerator — job openings — has fallen a lot, while the denominator — unemployed people — has barely budged, contrary to historical patterns.
"In 2022, many people expected a reduction in openings this large would have boosted unemployment much more," Indeed Hiring Lab's Nick Bunker writes in a note.
- "In post-war US economic history, such a sharp decline in openings without a corresponding spike in unemployment is unprecedented, singular and exceptional," he adds.
Compensation data out Tuesday showed wages are still rising at a solid clip. But Wednesday's data on job turnovers at least shows that there is no reacceleration in the job market occurring.
The direction of travel is toward a softer labor market, but the speed of travel is awfully slow.