Job openings fell to 8.7 million in October, well below estimates, to the lowest level since March 2021.

Workers at a restaurant at Grand Central Market in Los Angeles, California, United States, on Thursday, November 2, 2023.

Eric Thayer | Bloomberg | Getty Images

Job openings fell in October to their lowest levels in two-and-a-half years, a sign that the historically tight labor market may be slowing.

Job openings totaled 8.73 million during the month, a decrease of 617,000, or 6.6%. The Ministry of Labor reported Tuesday. The number was well below the Dow Jones estimate of 9.4 million and the lowest since March 2021.

The decline in vacancies has brought the ratio of vacancies to available workers down to 1.3 to 1, a level that just a few months ago was about 2 to 1.

Federal Reserve policymakers are watching the report, known as the Job Opportunities and Labor Turnover Survey, closely for signs of employment stagnation. The Fed has raised interest rates significantly since March 2022 in an attempt to slow the labor market and cool inflation, and is considering its next policy move.

While job openings declined significantly, total hiring decreased only while layoffs and terminations were modestly higher. Quitting, which is seen as a measure of workers’ confidence in the ability to change jobs and find another easily, has not changed much.

The decline in employment opportunities was widespread by industry.

The largest sector decline was education and health services (-238,000), followed by financial activities (-217,000), leisure and hospitality (-136,000) and retail trade (-102,000).

The JOLTS report comes just days before the Labor Department announces nonfarm payrolls for November. Economists expect that report to reach an increase of 190,000, up slightly from 150,000 in October, according to the Dow Jones Index.

Fed officials are targeting the hot jobs market as a specific area of ​​concern in their battle to bring inflation down from a four-decade high last year. Seeing a decline in job openings is likely welcome news to policymakers because it could mean that a decline in labor demand could help return the jobs market to what it once was a significant supply mismatch.

The Federal Reserve holds its two-day policy meeting next week, with markets largely expecting the Federal Open Market Committee to leave interest rates unchanged. Traders in the federal funds futures market are pricing in interest rate cuts to start in March on hopes that inflation data will continue to show progress as the central bank tries to stave off a potential slowdown or recession in the future.