California reported the highest number of layoffs in two years.
In February, job openings decreased in 21 states and the District of Columbia, marking the largest decline since the Job Openings and Labor Turnover Survey of states last summer. Some states, such as California (-57,000), Texas (-55,000), Illinois (-54,000) and Wisconsin (-61,000) continued to see fewer job openings, while Florida (-75,000) and Massachusetts (-18,000), which experienced a jump in job openings in January, posted declines in February. Nationally, job openings cooled significantly from 10.6 million to 9.9 million.
The national ratio of job openings to job seekers dropped to 1.7 in February from 1.9 in January, indicating that for every three unemployed individuals, there were five job opportunities available. Though this ratio decreased from last month, it remains higher than the level of 1.2 seen before the pandemic in February 2020. At the state level, 33 states and the District of Columbia had ratios equal to or greater than the national level. South and North Dakotas reported ratios equal to or above 3.0, while New York and Washington reached the balance point of 1.0 in the labor market.
The total number of hires slowed but not materially, with 6.2 million people hired in February. The hires rate decreased slightly from 4.1% in January to 4.0% in February. Slower hiring was reported in Pennsylvania, Georgia, California and Washington, while Colorado and Nebraska reported more hires in February.
California reported the highest number of layoffs and discharges since February 2021, impacting mostly workers in the tech and housing sectors. Overall, layoffs and discharges dropped. New Jersey, Texas and North Carolina recorded significant decreases in layoffs.
The national quits rate increased to 2.6% in February, with over 4.0 million people quitting their jobs. The District of Columbia, Georgia, Maryland and Maine all experienced higher quits rates. Some states with larger populations, such as Texas, Georgia and Virginia, also saw more people quitting their jobs. Pennsylvania was the only state with a significantly lower number of quits over the month.
Job switchers are still enjoying double the pay rise compared to job stayers. If the job openings and quits levels remain above pre-pandemic levels, that could buoy wage gains into spring. Wages do appear to have cooled off from the red-hot pace of a year ago.
The lower level of job openings in February indicates that the labor market is beginning to ease, despite persistently low unemployment. Job creation has also slowed but remains well above the pace we saw prior to the pandemic. The Federal Reserve is looking for a more dramatic slowdown in both wages and employment to derail a stickier inflation. The credit tightening in the pipeline is expected to hit firms with fewer than 250 employees hardest; those firms accounted for a record 71.4% of all job openings in February.
Job openings are expected to cool more dramatically as we move into late Spring and early summer. The job posting sites have already seen a more dramatic cooling than that available in the official data.
The lower level of job openings in February indicates that the labor market is beginning to ease.