March figures reveal a slowing labor market, though layoffs remain minimal—a development likely to be well-received by Federal Reserve policymakers.
The once-booming labor market showed signs of slowing in March, according to government data released on Wednesday.
Employers reported 8.5 million unfilled job openings at the end of March, marking the lowest level since early 2021. Additionally, the number of hires reached its lowest point in nearly four years, suggesting that the high demand for workers may finally be easing.
This cooling trend is likely to be seen as a positive development by Federal Reserve policymakers, who concluded their two-day meeting on Wednesday. With inflation proving stubbornly persistent, Fed officials view declining job openings as an indication that the labor market is moving toward better equilibrium.
For workers, however, this shift could mean a decrease in the leverage that has fueled significant wage growth in recent years. The number of people voluntarily quitting their jobs dropped to 3.3 million—the lowest in over three years—compared to the peak of the “great resignation” in 2022, when over four million workers were leaving jobs monthly.
“This steady moderation is broadly beneficial for the labor market and the economy overall, and it seems sustainable for now,” wrote Nick Bunker, economic research director at the Indeed Hiring Lab, in a note on Wednesday. However, he cautioned, “if job openings continue to shrink for an extended period, the hiring of unemployed workers may decline enough to push unemployment higher.”
For now, the labor market remains resilient. Despite notable layoffs at a few large corporations, overall job cuts remain low and even declined in March. While job openings have decreased, there are still approximately 1.3 open positions for every unemployed worker. Additionally, data from the Labor Department on Tuesday showed wage growth accelerating in the first quarter, indicating workers still hold some bargaining power.
The figures released Wednesday are part of the Labor Department’s monthly job openings and labor turnover survey. A clearer and more up-to-date picture of the labor market will emerge on Friday, with the release of the government’s monthly jobs report.
Forecasters anticipate that April’s report will show employers adding around 240,000 jobs and maintaining an unemployment rate below 4 percent for the 27th consecutive month.