US vacancies were little changed in February and remained at historically high levels, a sign that the US labor market remains strong.
The Labor Department reported Tuesday that employers posted 8.76 million job openings in February, a modest increase from January’s 8.75 million and about what economists had forecast.
But the Job Openings and Labor Turnover Survey (JOLTS) shows that layoffs rose from 1.6 million in February to 1.7 million in January, the highest since March 2023. The number of Americans leaving their jobs – a sign of confidence that they can find better wages or working conditions elsewhere – rose modestly to 3.5 million.
The number of monthly vacancies has fallen from a peak of 12.2 million in March 2022, but is still at a high level. Before 2021, they had never reached more than 8 million.
The high vacancy level is a sign of the strength and endurance of the labor market. When the Federal Reserve began raising interest rates two years ago to combat inflation, most economists expected higher borrowing costs would push the United States into a recession.
Instead, the economy has continued to grow and employers have started looking for new workers and holding on to those they already have. Although the unemployment rate rose to 3.9% in February, it has been below 4% for 25 months in a row, the longest streak since the 1960s.
“While speculation is rife that employment has slowed, recent data, including job openings and initial unemployment claims, continue to indicate that the U.S. labor market has remained stable,” said Eugenio Aleman, chief economist at Raymond James. a note.
At the same time, higher interest rates have lowered inflation. In February, consumer prices rose 3.2% from a year earlier – down from a four-decade high year-on-year peak of 9.1% in June 2022.
The combination of declining inflation and robust job growth has raised hopes that the Fed will succeed in achieving a “soft landing” – curbing inflation without triggering a recession. The Fed stopped raising rates last July and has indicated it plans to reverse course and cut rates three times in 2024. But she appears to be in no rush to start, given the strength of the economy and inflation still above the central bank’s 2% target. .
“Vacancy rates are still high compared to pre-pandemic numbers, indicating continued strong demand for workers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “A strong labor market backdrop, coupled with inflation declining but remaining above target, supports the Fed’s current patient stance on future policy decisions.”
Compared to layoffs, the steady decline in job openings is a painless way to cool a labor market that is red-hot, relieving upward pressure on wages that can lead to higher prices.
“The cooling in the U.S. labor market has not been entirely painless, but the shock has been muted compared to both expectations and historical precedent,” Nick Bunker, director of economic research at Indeed Hiring Lab, said in a note.
The workforce likely remained healthy over the past month. Economists expect the March jobs report, due Friday, to show that employers added nearly 193,000 jobs and the unemployment rate fell to 3.8%, according to a survey of forecasters by data firm FactSet.