US job openings decline in February amid steady labor market

The US Department of Labor released data on job openings in February, showing a drop from 10.6 million to 9.9 million, the lowest level in almost two years. This decline suggests that the labor market is cooling down after a strong rebound from the pandemic-induced recession, but it also indicates that there is still plenty of demand for workers across various sectors.

What caused the decline in job openings?

According to the report, the decline in job openings was mainly driven by a decrease in vacancies in the accommodation and food services sector, which shed 355,000 openings in February. This sector was hit hard by the winter surge in COVID-19 cases and the resulting restrictions on indoor dining and travel. Other sectors that saw a decline in job openings include health care and social assistance (-177,000), state and local government education (-124,000), and retail trade (-104,000).

New York had the lowest job openings rate in January 2023 https://t.co/NLih5sIlIV #BLSdata pic.twitter.com/fplk43pgq6

— BLS-Labor Statistics (@BLS_gov) April 3, 2023

What does this mean for the labor market outlook?

Despite declining job openings, the labor market remains healthy and resilient. The number of hires increased by 273,000 to 5.7 million in February, indicating that employers are filling positions faster than creating new ones. The quits rate, which measures voluntary job separations and reflects workers’ confidence in finding better opportunities, remained at 2.3 percent. The layoffs and discharges rate, which measures involuntary job separations and reflects employers’ willingness to retain workers, fell to a record low of 1 percent.

Moreover, the decline in job openings may be temporary and reflect seasonal factors rather than a fundamental shift in labor demand. As the vaccination campaign accelerates and more states ease COVID-19 restrictions, consumer spending and business activity are expected to increase in the coming months, boosting the need for workers in leisure and hospitality, education, and health care sectors. The passage of the $1.9 trillion stimulus package in March also provides additional support for households and businesses, which could translate into more hiring and wage growth.