Yahoo FinanceUS Labor Market Shows Signs of Losing Steam, Putting the Fed on Alert

(Bloomberg) -- Economists and some Federal Reserve officials are increasingly on alert that pain could be on the horizon for American workers amid signs the labor market is losing steam.
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Companies are posting fewer job openings this year and employees are quitting less as unemployment has begun creeping up from low levels, signaling the end of the historically-tight labor conditions that characterized the rapid recovery from the pandemic shock.
Strength in hiring has so far helped the economy weather aggressive Fed tightening, which brought interest rates to the highest levels in two decades. With inflation still running above the central bank’s 2% target, the fear is that any further softening in labor conditions could start to snowball and put economic growth at risk.
“Any change in the outlook for the labor market could have significant implications for the direction of the economy and monetary policy,” said Rubeela Farooqi, chief US economist at High Frequency Economics. “If there is one thing we know for sure, it is that conditions change very quickly.”
Two key reports this week from the Bureau of Labor Statistics — Tuesday’s monthly update on job openings and Friday’s on broader employment trends — will offer more clues about where the labor market is headed.
Last month’s Job Openings and Labor Turnover Survey release, known as JOLTS, showed total listings for open positions fell in April to 8.1 million, a three-year low. That is down more than a third from the peak of 12.2 million reached in 2022, when employers hampered by labor shortages were struggling to keep up with a surge in demand as the economy reopened.
There are now just 1.2 postings for each person looking for work, similar to pre-pandemic levels. The quits rate, at 2.2% in April, has also returned to levels that prevailed before Covid-19.
Kelly Bonn, a headhunter and executive coach in St Petersburg, Florida, said inquiries from job-seekers asking for help are up about 30% since the end of 2023. Finding a job can often take two to five months now, compared to one or two months in 2021 and 2022, according to Bonn.
“Employers are definitely taking their time and being choosier about who they bring in,” she said. Meanwhile those with jobs have become more wary about leaving stable positions for new opportunities: “They don’t want to be unemployed in this market.”