U.S. labor market starts to cool as job openings drop

STORY: The hot U.S. labor market appears to be cooling down.

Job openings fell sharply in August, the biggest drop in nearly 2-1/2 years, suggesting that the labor market was starting to sag as the economy grapples with higher interest rates aimed at dampening demand and taming inflation.

Job openings dropped by 1.1 million to 10.1 million-- the largest decline since April 2020, when the economy was reeling from the health crisis.

The sharp decrease was led by healthcare and social assistance, followed by the retail industry.

Still, vacancies are high. With over 10 million available positions – there are about 1.7 job openings for every unemployed person in August.

And layoffs remain low.

Taken all together— it’s all a sign of a still-tight labor market, which will likely keep the Federal Reserve on its aggressive monetary policy tightening path.

The U.S. Central Bank has hiked its policy rate from near zero in March, to the current range of 3.00% to 3.25%. They have signalled more large increases were on the horizon.

As one analyst told Reuters - "The heat of the labor market is slowly coming down to a slow boil “ but, he added, "this is still very much a job seekers' labor market.”