US job openings at 3-year low as demand for labour eases

WASHINGTON: US job openings fell to a three-year low in March, while the number of people quitting their jobs declined, signs of easing labor market conditions that over time could aid the Federal Reserve's fight against inflation.

The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Wednesday was, however, offset by other data showing a measure of prices paid by manufacturers for inputs jumped to the highest level in nearly two years in April.

Falling goods prices were the major driver of the moderation in inflation last year. With price pressures picking up in the first quarter, the surge in input costs is unlikely to be welcomed by policy makers as they wrap up their two-day policy meeting. Fed officials are expected to leave the U.S. central bank's benchmark overnight interest rate unchanged in the current 5.25 percent-5.50 percent range, where it has been since July.

"Continued cooling in the labor market is part of the Fed's plan to help return inflation to 2 percent, with job openings serving as one of the Fed's barometers," said Mark Streiber, an economic analyst at FHN Financial.

"While it is too early to say that the easy goods disinflation we experienced in 2023 is over, upward pressure on goods is an unwelcome development for the Fed."

Job openings, a measure of labor demand, were down 325,000 to 8.488 million on the last day of March, the lowest level since February 2021, the Labor Department's Bureau of Labor Statistics said. Data for February was revised slightly higher to show 8.813 million unfilled positions instead of the previously reported 8.756 million.

Economists polled by Reuters had forecast 8.686 million job openings in March. Vacancies peaked at a record 12.0 million in March 2022. There were 1.32 job openings for every unemployment person in March, down from 1.36 in February.March's decline in job openings was led by construction, with 182,000 fewer unfilled positions.

Vacancies decreased by 158,000 in finance and insurance. But job openings rose by 68,000 in state and local government education.

The job openings rate fell to 5.1 percent from 5.3 percent in February.

Stocks on Wall Street were trading lower. The dollar was steady against a basket of currencies. US Treasury prices were mostly higher.

MANUFACTURING FALTERSThe Fed has raised its policy rate by 525 basis points since March 2022.

Financial markets have pushed back the expected timing of a rate cut this year to September from June.

A handful of economists continue to expect that borrowing costs may be lowered in July, believing that the labor market will slow noticeably in the coming months.

Others see the window closing for the Fed to start its easing cycle.

Hiring dropped 281,000 to 5.500 million. Trade, transportation and utilities hiring decreased 103,000, while leisure and hospitality reported a 51,000 decline. The hires rate fell to 3.5 percent from 3.7 percent in February.

Layoffs decreased 155,000, the most in nearly a year, to 1.526 million.

That was the lowest level since December 2022, pointing to a solid labor market.

The number of people quitting their jobs dropped 198,000 to 3.329 million in March, the lowest level since January 2021. The decline in resignations was concentrated in trade, transportation and utilities, as well as other services.

The quits rate, viewed as a measure of labor market confidence, slipped to 2.1 percent, which was the lowest since August 2020 and followed 2.2 percent in February. The decline soothed fears that wage growth could be accelerating after a surge in labor costs in the first quarter.

Nonetheless the outlook for inflation remains challenging.

A survey from the Institute for Supply Management (ISM) on Wednesday showed its measure of prices paid by manufacturers for inputs shot up to 60.9 in April, the highest reading since June 2022, from 55.8 in March. Part of the increase reflected higher oil prices. The overall ISM manufacturing PMI dropped to 49.2 last month from 50.3 in March, which was the highest and first reading above 50 since September 2022.A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.4% of the economy.

"Oil prices have since returned to levels from the end of March, though they are likely to remain supported by resilient global demand as the outlook for China and the US improves," said Matthew Martin, U.S. economist at Oxford Economics.