In August, the number of vacancies in the U.S. fell by more than 1 million

The tight U.S. labor market began to show signs of easing in August. According to data published on Tuesday by the Bureau of Labor Statistics, the number of job openings fell to just under 10.1 million, compared with 11.2 million in July. This is the lowest number since June 2021. According to Refinitiv estimates, economists expected the number of job openings to decrease to 10.8 million.

The latest Job Openings and Turnover Survey (JOLTS), found that the largest decrease in available jobs (since April 2020) means that there are now almost 1.7 openings for every person looking for a job, down from 2 openings in July.

The number of quits increased slightly to 1.5 million from 1.4 million in the previous month. On Tuesday, economists from analyst firm Lightcast said that hiring and quitting remained pretty steady at 6.3 million and 4.2 million, respectively, indicating that workers are still not afraid to change jobs and look for new opportunities.

Lightcast chief economist Bledi Tasca said about the development of the market in the way it was intended. He said there was an intention to decrease the numbers, but with keeping hiring and firing levels. "There is hope for a soft landing," Tusс added.

This is good news for the FRS, which wants more easing in the labor market because of worries that a lack of jobs could lead to higher salaries and, consequently, a persistently high rate of inflation.

The decrease in available jobs is consistent with a broader economic downturn as the FRS raises interest rates to reduce inflation, Daniel Zhao, lead economist for Glassdoor's economic research group, said to CNN Business. According to him, almost all industries have seen a decline in the number of job openings, indicating a broader slowdown.

He compared it to cooling temperatures.

According to Alex Pelle, U.S. economist at Mizuho Americas, while the latest data seem to show some leveling in the historically tight labor market, there is still a long way to go. In a research note, he pointed out that a vacancy-to-unemployment ratio of 1.2 between 2017 and 2019 is generally seen by policymakers as a benchmark for full time employment.

He wrote that extreme imbalances in the labor market are a major problem with the medium-term outlook for U.S. inflation. He claims that salaries are growing too fast compared to productivity growth. So the FRS' solution for this problem is to redirect the labor market from workers to firms. Ideally, the FRS would like to calibrate this system to be right, but in practice it is more likely that the FRS will stop acting when the labor market shows signs of breaking down.

JOLTS is the first of several key labor market reports coming out this week: the ADP private sector payroll report on Wednesday; the Labor Department's weekly jobless claims on Thursday; and the September employment report on Friday.

All of this could seriously affect the FRC's next policy meeting on November 2.