Job openings rebounded in August

October 18, 2023

Job openings surged by 783,000 to 9.6 million in August, reversing the downward trend observed in the previous three months. This figure of 9.6 million was the highest since April. However, it remained 14% below the 2022 average and 4% beneath the 2021 average. Overall, labor demand has significantly moderated.

On a state level, 23 states posted higher job openings. Illinois, New York, Florida and Ohio registered substantial increases in job openings for August. After a decline in July, Florida reported a gain of 42,000 job openings, further emphasizing its standing as one of the most vibrant job markets post-pandemic.

The ratio of job openings to unemployed job seekers remained at 1.5 in August. A total of 41 states, including the District of Columbia, recorded ratios either equal to or surpassing the national average. The Dakotas, Maryland, New Hampshire and Nebraska posted ratios of 3 or higher. Conversely, highly populated states like California, New York and Texas showed some of the nation's lowest ratios, slightly above 1. No state reported a ratio below 1, indicating tight labor markets despite some easing signs.

Hiring gained momentum in August, with notable increases observed in Texas, New Jersey and Kentucky. As migration to southern states persists, the South remains a primary driver in job openings and hires. Hiring in California experienced a large decline. Slowdowns in the tech and transportation sectors influenced recruiting processes, leading many companies to reduce their hiring rates.

Layoffs remained steady in August. A rise in layoffs in Illinois, New York and Minnesota was counterbalanced by decreases in Massachusetts, New Jersey and Virginia. Minimal signs of spillover effects were seen from the writers and actors strikes during the month. Given that one of the strikes had concluded in late September, significant layoffs resulting from it are unlikely on both national and state levels. The United Auto Workers strike, initiated in mid-September, currently involves over 34,000 members. As this strike persists, auto companies might face layoffs due to production interruptions, potentially influencing layoff statistics in Midwestern states for both September and October.

In August, the total number of quits rose by 19,000, but the quits rate stayed consistent with July's numbers. Most states have now reverted to their 2019 quits levels. A consequence of these lower rates is the narrowing wage premium for job hoppers. As reported by the payroll processing company ADP, August marked the first month since July 2021 in which job changers saw less than a 10% wage increase, a stark contrast to the peak of 16% from April to August 2022. Recent data suggests that wage growth declined further in September.

This trend of lower quits rates and diminishing wage growth premiums for job switchers should be interpreted as positive news for the Federal Reserve. With wage growth on the decline, the threat of a wage-price spiral is fading as well.