The U.S. job market is experiencing a significant slowdown, with job openings plummeting to their lowest level in three years, according to the latest Job Openings and Labor Turnover Survey (JOLTS) data, released this week.
While this cooling of the labor market might help control inflation, it poses challenges for job seekers, both employed and the unemployed.
Workers are reporting increasingly lengthy hiring processes with multiple stages and complex tests, coupled with employers showing little willingness to negotiate.
The JOLTS data revealed that job openings in April dropped to 8.1 million from 8.4 million in March, marking the lowest level since early 2021. This is a significant decline from the record 12 million job openings in 2022. However, job listings remain higher than pre-pandemic levels, which tracked at just under 7 million.
Nick Bunker, an economist at Indeed, noted that despite the slowdown, the labor market is not in crisis. Most people who want jobs are still finding them, albeit with more difficulty. Layoffs and the unemployment rate remain low, aligning with the Federal Reserve's objectives when it began raising rates in 2022.
"Even if it's very frustrating that a person with a job can't go out and find a new job and get a huge pay raise very quickly, that's actually probably the least painful way for the labor market to have cooled down over the last few years," Bunker said.
The number of people quitting jobs rose slightly to 3.5 million from a three-year low of 3.4 million in the previous month, indicating a decrease in labor demand. Additionally, 5.6 million people were hired in April, a slight increase from the prior month, while 5.4 million lost jobs.
The ratio of job openings to unemployed workers fell to 1.24 from 1.3 in March, down from a peak of 2.0 in 2022, bringing it closer to pre-pandemic levels. Federal Reserve officials have been closely monitoring this ratio to gauge the labor market's strength.
Despite the slowdown, the U.S. economy is forecast to add 190,000 new jobs in April, with the jobs report due on Friday providing further insights into the labor market's trajectory. The Dow Jones Industrial Average rose, but the S&P 500 fell slightly in Tuesday trading, reflecting mixed reactions to the JOLTS data.