In February, there were 1.8 vacancies for each unemployed person. Before the pandemic there were usually more unemployed than vacancies.
WASHINGTON – In February, the number of vacancies was at an almost record high, almost unchanged from the previous month, continuing the trend that Federal Reserve officials see as a factor in inflation.
Last month there were 11.3 million jobs, down from January and just below the December record of 11.4 million, This was announced on Tuesday by the Ministry of Labor.
The number of Americans who quit their jobs was also historically high – 4.4 million compared to 4.3 million in January. More than 4.5 million people quit their jobs in November, the largest number in two decades. Many people enjoy many opportunities to change jobs, often for higher pay. The vast majority of those who quit do so to take a different position.
Tuesday’s report is separate from the government’s monthly employment report, which showed in February that employers added a reliable 678,000 jobs.
The data “shows that the labor market remains hot,” said Stephen Stanley, chief economist at Amherst Pierpont, in a research note. “During the month when the economy had 678,000 jobs, the number of vacancies fell by only 17,000. This indicates the depth of employers’ rates of employment.”
The large number of available jobs and their layoffs contributed to high inflation as many companies had to raise wages to attract and retain workers. In February, there were 1.8 vacancies for each unemployed person. Before the pandemic there were usually more unemployed than vacancies.
The unemployment rate of 3.8% is approaching the pandemic level of 3.5%, which was the lowest in five decades. And the number of people working or looking for work is still several million less than before the pandemic, forcing employers to compete among fewer jobs.
Because of these trends, Federal Reserve Chairman Jerome Powell has singled out vacancies and layoffs as key indicators of labor market health and the Fed’s interest rate policy goal. Powell said the central bank hopes to cut the number of jobs available as a way to cool wage increases and price inflation.
“If you just reduced the number of vacancies … you would have less pressure to raise wages,” Powell said. “We need to use our tools to bring supply and demand back together.”
As employers desperately seek workers, wages rose 4.5% in 2021, the fastest rate in two decades. Many businesses, in turn, took more from their customers to cover higher labor costs.
Inflation jumped 7.9% in February from a year earliera maximum of four decades.
Earlier this month the Fed said it had raised its short-term interest rate for the first time in four years to about 0.375% to curb inflation. This year, including potentially, more rate increases are expected increases by one or more half-points.
Powell hopes that by cutting vacancies and slowing wage growth, the Fed can reduce inflation without causing mass layoffs and raising unemployment. Economists are generally skeptical, however, that the Fed could achieve such a “soft landing” for the economy. They are worried that raising the Fed rate will lead to job losses and possibly even a recession.
