Workers won't be able to say "I quit" much longer as job openings fall

Fewer job openings in August didn't dissuade people from quitting their jobs and moving on, but it's definitely a sign the labor market is slowing, analysts said.

Job openings fell to 10.1 million, or 6.2% rate of job openings, at the end of August from 11.2 million in July even as the number of people quitting their jobs held about steady at 4.2 million, according to Bureau of Labor Statistics data on Tuesday. Hiring was little changed around 6.3 million, or a 4.1% rate, in August, while layoffs and discharges held steady near 1.5 million, or 1%.

"Business caution is starting to creep in," said James Knightley, ING chief international economist, which is why there are fewer job openings. Even so, people still feel confident that if they quit their jobs, the can easily find another. For every unemployed American, there were 1.67 jobs available at the end of August.

Should job quitters worry?

Yes. Even though the number of jobs available still favors workers, that's fast declining.

The number of open jobs for each unemployed worker stands at a still healthy 1.67, but that's down from 1.9 in July.

Since March, quits have fallen 7%, or 15% annualized, noted Dan North, senior economist at trade credit insurer Allianz Trade North America.

"Most people that quit do so to get hired at another job, so the difference between available jobs and quits is critical as well," he said. "And that difference has fallen through the floor since March, crashing 20%, or 42% annualized. Quitters are now going to have to rush back into the labor market before the openings dry up."

Where were the jobs?

Almost every industry saw fewer job openings. The only exceptions were construction, wholesale trade and real estate and leasing. Openings dropped in every region of the country, with the largest drop in the Midwest.

Hiring was split. Retail trade, accommodation and food services, and health care saw more hiring but the federal government, educational services and arts, entertainment, and recreation declined.

Most of the quitting were in accommodation and food services (+119,000) while professional services held on to their workers with the number of quits dropping by 94,000.

What does this mean for the economy?

While jobs still look plentiful for now and hiring's steady, economists say the red-hot labor market is cooling.

"This is still very much a job seekers’ labor market, just one with fewer advantages for workers than a few months ago," Nick Bunker, Indeed Hiring Lab economic research director, said.

With a recession looming, there’s a significant short-term emphasis on hiring freezes and headcount reductions, KPMG said Tuesday morning in its 2022 outlook survey of 1,325 global chief executives across 11 markets. It found that 39% of CEOs have already implemented a hiring freeze, and 46% are considering downsizing their workforce over the next six months.

"As vacancies become more apparent, workers may become more cautious and less inclined to leave the security of the place where they have tenure and go to another employer," Knightley said. "Wages are still high, but momentum will be slowing in coming months."'

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What does this mean for the September jobs report?

"This hints at some downside to this Friday's payroll report although the job openings rate tends to lead the unemployment rate by a few months," Jennifer Lee, BMO senior economist. That means the full effect of the job openings report likely won't show up in Friday's monthly jobs report or even next month's report.

Deutsche Bank forecasts nonfarm payrolls up 275,000 in September and JP Morgan's more bullish at 300,000. ING says the market's looking for 265,000.

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When will the job losses come?

Knightly predicts payroll numbers will remain positive this year but get smaller as the year comes to a close. In the first half of 2023, though, "the recession environment may feel more real" and we might start seeing job losses.

The Federal Reserve predicted last month the unemployment rate would rise to 4.4% next year from 3.7% in August. For the jobless rate to get that high, the economy would have to lose 1.2 million jobs if the number of workers remained constant.

"Although we may continue to see some strong job gains for a few months to come, the party will be over soon," North said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: Job openings down significantly since August, and it could keep going