Is labor market is cooling or will it continue to defy expectations?

Job Openings declined to 9.6M, the lowest in almost two years, suggesting that business demand for talent is starting to wane. All US regions saw job openings decline in March, with the largest reductions in the Midwest and West.

Layoffs increased to 1.8M, much closer to the historical average and well-above the historic lows of the past couple of years. Nearly every sector and region experienced increases in Layoffs, with Information and Trade, Transportation and Utilities among the notable exceptions.

Job vacancies sank to a two-year low in March, while layoffs jumped to their highest level since December 2020, the latest signs of a softening labor market. Layoffs hit 1.8 million last month, up from 1.6 million in February, led by job losses in construction, accommodation and food services and health care, according to the Labor Department’s Job Openings and Labor Turnover Survey. Vacancies fell to 9.6 million from 10 million in February. The ratio of open jobs to unemployed people is now 1.6, the lowest since October 2021.

Job openings remain plentiful, if less so as businesses prepare for an economic downturn by cutting unfilled jobs and/or eliminating current positions. Hiring continues, but at a slow pace that suggests that where businesses can find qualified workers for essential activities, they are bringing them on board. Job separations are increasing for layoffs and discharges, while voluntary job leavers are on the decline. As a result, there is less churn in the job market, and likely with the result that upward pressure on employee compensation will ease further. Some of those losing jobs may need a little longer to find new employment.

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