At a Glance
- U.S. job openings have hit their lowest point since February 2021, according to Indeed’s Job Postings Index.
- The ongoing government shutdown is hindering the release of crucial labor market data, including BLS reports.
- August’s JOLTS report indicated a slowdown in the job market, with 7.23 million openings and a 7% decrease from January.
- Employers are offering smaller pay increases, with salary growth at 2.5% year-over-year in August, down from 3.4% in January.
- The Federal Reserve has begun cutting interest rates, citing concerns about the weakening labor market despite inflation remaining above target.
Job Market Weakens Amidst Data Delays
Employment opportunities in the U.S. have declined to their lowest level since February 2021, signaling a challenging period for the job market. Indeed’s latest Job Postings Index registered 101.9 as of October 24, a figure not seen in nearly five years, using a February 2020 baseline of 100.
This indicates a 0.5% decrease from the beginning of October and a 3.5% drop compared to mid-August, according to the Bureau of Labor Statistics (BLS). The economic slowdown is exacerbated by the ongoing government shutdown, which has prevented the release of key labor reports.
💡 The monthly Job Openings and Labor Turnover Survey (JOLTS) from the BLS, a report closely monitored by the Federal Reserve, was notably absent last Friday due to the shutdown.
Federal Reserve Responds to Hiring Slowdown
In the absence of the latest BLS data, attention has shifted to the August JOLTS report. This report already highlighted a cooling job market, showing 7.23 million job openings—unchanged from July but down 7% from January.
The shutdown has further compounded these trends, with Indeed’s platform showing a reduction in job advertisements and more modest salary increments from employers. In August, year-over-year salary offerings increased by only 2.5%, a notable decrease from the 3.4% gain recorded in January.
📊 This broader trend of slowing hiring and reduced pay growth has prompted concern from the Federal Reserve, leading to a recent decision to cut interest rates.
Interest Rate Adjustments and Economic Outlook
The Federal Open Market Committee recently voted to reduce its benchmark interest rate by 25 basis points, setting the new range at 3.75% to 4%. This move comes as inflation remains approximately 1% above the Fed’s 2% target, but with growing apprehension about the labor market’s performance.
Fed Governor Lisa Cook acknowledged this shift, stating, Hiring is slowing. We see this from Indeed, from job postings. We’re looking at a panoply of data, and those are real time. We’re not waiting on the unemployment report. There’s reason to be concerned, because there’s a slight uptick in the unemployment rate over the summer.
The scheduled release of the nonfarm payrolls report for October was also canceled due to the shutdown. Economists surveyed by Dow Jones had anticipated a drop of 60,000 jobs and a rise in the unemployment rate to 4.5% for the month.
Expert Summary
The U.S. job market is experiencing its most significant downturn in years, with job openings at a multi-year low. The government shutdown has created a data blackout, making precise analysis difficult, yet available indicators point to a widespread hiring slowdown and moderated wage growth. In response, the Federal Reserve has initiated interest rate cuts, reflecting concerns over the evolving labor landscape alongside persistent inflation.