The Federal Reserve is aggressively raising interest rates in order to reduce demand for goods, services, and labor, and the August JOLTS report suggests those actions are finally denting the labor market. Job openings fell by 1.1 million—the largest one-month drop since the early months of the pandemic. The number of vacancies is now the lowest it has been since June 2021, with vacancies slowing across all company size categories.
Some parts of the labor market are still recovering. Encouragingly, state and local government excluding education posted a record-high number of hires for the month. But other industries are tilting back to normal, now that their staffing levels have recovered. And still others are seeing hiring slow more substantially, because they’re disproportionately affected by rising interest rates, or lower stock prices, or a strong dollar.
Overall, it’s still an incredibly tight labor market, with over 4 million more job openings than unemployed job seekers—where the Army missed its recruiting goal by 25% and striking fast-food workers in San Francisco just secured a 29% raise. For now, the monthly numbers of hires and quits are holding steady at levels well above pre-Covid norms. Quits reached a new record high in small businesses with 10 to 49 employees.