The demand for labor stayed strong in October as concerns over the delta variant faded and the economy continued to bounce back from the pandemic.
Job openings, a proxy for labor demand, reached 11.03 million, exceeding 11 million for the second time on record, slightly lower than the all-time high set in July, according to the job openings and labor turnover survey, or JOLTS, from the Bureau of Labor Statistics on Wednesday.
Such strong demand for workers put more pressure on a labor market that has been extremely tight since the beginning of the summer, when the economy started to reopen on a broad scale.
As a result, the number of job openings per unemployed worker climbed to 1.49 in October from 1.38 in September, continuing to underscore the increasing mismatch between demand and supply of labor.
At the same time, the rate at which workers quit their jobs slowed to 2.8% on the month from the record 3.0% in September. While it is an encouraging sign for businesses that have been struggling with low retention rates, the October reading remained elevated compared to the pre-pandemic level of around 2.3%.
The number of job quits declined for all firm sizes, with the largest decreases coming from the smallest firms with fewer than nine employees, down by 123,000, and from large firms with more than 1,000 employees, down by 43,000.
Layoffs also declined by 35,000 to 1.36 million in October, significantly lower than the pre-pandemic level at 1.7 million, as firms have had less incentive to let their workers go amid the persistent labor shortage in recent months.
Labor shortages also caused hiring to slow in October as job hirings decreased by 82,000, to 6.5 million.
The takeaway
While Wednesday’s report pointed to an increasingly tight labor market, it is important to note that the report showed what happened two months ago in October.
Since then, with more data on employment coming from the Bureau of Labor Statistics, we expect to see some of the challenges from the supply side easing in November as workers, who had been on the sidelines, come back to work at a higher rate.
Still, there is a long way to go before the mismatch between labor demand and supply are resolved as millions of workers continue to stay out of the labor force compared to the pre-pandemic level.
