According to the latest Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics, the total number of nonfarm job openings fell to a seasonally adjusted level of just over 9.9 million in February. This is the second consecutive monthly decline in this data, and it is significant for several reasons.
The February reading marked the first time since May 2021 the number of openings dropped below 10 million. As you can see on the chart, the number of openings peaked in March 2022 at just over 12 million. That means in just the past year, the number of openings has declined by 17 percent.
At the peak, there were more than two openings for every unemployed worker in the U.S. As of this past February, the ratio had fallen to close to 1.7 jobs for every worker.
I have been analyzing economic data for a long time, but I am happy to say there are still times when a chart can make me say "wow." A couple of years ago, if you had told me the number of job openings shortly after the pandemic would surge to 12 million, and that this would represent an openings-to-workers ratio of greater than two to one, then I would have assumed you had partaken in too much recently legalized cannabis. And I could never have imagined a scenario in which a year-over-year decline of 17 percent in the total number of openings would one day actually be considered a good thing.
Yet here we are. Job openings are declining rapidly, which means the sharp rise in the Fed's interest rates is having at least some of the desired effect, which means the rate of inflation should also continue to decline.
But the biggest questions still remain: How far and how fast will this data fall this year? And what will the rest of the economy look like when this trend hits bottom? All I can say is stay tuned.
For plastics processors, there are some interesting clues to be gleaned about the possibilities for the future tucked away in the breakdown of the aggregate data. For instance, the total number of job openings in the manufacturing sector declined to about 694,000 in February. This data peaked in April 2022 at just over 1 million openings, so in the 10 months since then, the total number of openings for manufacturers has dropped by 32 percent. During the two decades before the pandemic, this data series averaged around 350,000 openings per month.