US Faces Consecutive Layoffs... March Job Openings Hit Lowest in Nearly 2 Years

As major companies in the United States continue with layoffs, the number of private job openings in March also dropped to the lowest level in about two years. This is seen as a signal that the labor market overheating is cooling down due to the Federal Reserve's (Fed) aggressive tightening since last year.

[Image source=Reuters Yonhap News]

According to the Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor on the 2nd (local time), the number of private sector job openings in March was recorded at 9.59 million. This is a slight decrease from nearly 10 million in the previous month. It has declined for three consecutive months, marking the lowest monthly level since April 2021, about two years ago. It also fell short of Wall Street's initial forecast of 9.7 million.

Among all separations, voluntary quits for job changes were 3.9 million, similar to the previous month. In contrast, involuntary separations such as layoffs increased to 1.8 million, up from the revised 1.6 million in the previous month. The ratio of job openings to unemployed persons, closely watched by the Federal Reserve (Fed), stood at 1.6. Although it still exceeds pre-pandemic levels, it has dropped to the lowest point since October 2021.

The Wall Street Journal (WSJ) reported, "Job openings have fallen to the lowest level in about two years, and layoffs have surged," adding, "With companies such as Meta Platforms, the parent company of Facebook, Alphabet, the parent company of Google, and Microsoft announcing workforce reductions, layoffs are approaching pandemic levels." The day before, reports emerged that Morgan Stanley, a major Wall Street investment bank, would lay off 3,000 employees by the end of the second quarter. Earlier, Goldman Sachs also carried out large-scale layoffs of over 3,000 employees.

These indicators were released as the Federal Open Market Committee (FOMC) began its two-day meeting on May interest rate decisions. With a baby step (a 0.25 percentage point increase in the benchmark interest rate) virtually certain, the market's focus is on when the Fed will pause rate hikes. According to the CME FedWatch tool, as of the morning of this day, the federal funds futures market reflects nearly a 95% probability that the Fed will take a baby step at the May FOMC. If so, the U.S. benchmark interest rate will reach 5 to 5.25%, the highest in 16 years.

The April employment report will also be released on the 5th. Luke Tilley, chief economist at Wilmington Trust Investment Advisors, said, "It appears that the labor market is normalizing," adding, "The biggest question is whether it will stop at a 'normal' state or lead to contraction."

This content was produced with the assistance of AI translation services.