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The numbers: Job openings in the U.S. fell sharply in August to a 13-month low of 10.1 million, a sign the red-hot labor market might be cooling off a bit as interest rates rise and the economy slows.

Job listings slid from 11.2 million in July to mark the second largest monthly drop ever, the Labor Department said Tuesday. Layoffs also rose to the highest level in 18 months, though they are historically low.

The decline in job openings was the fourth in five months. And openings sank below 11 million for the first time since November 2021.

The number of job openings is viewed as a way to assess the strength of the labor market and the broader economy. Yet while it isn’t sizzling as much as it was earlier in the year, the labor market is still quite strong.

The number of jobs being filled, for instance, rose slightly to 6.28 million from 6.24 million. Hiring had declined for five months in a row until August.

The number of job quitters also rose to 4.16 million from 4.06 million and was not far from the all-time high. People quit more often when they think it’s easy to get a better job.

Big picture: The U.S. economy is starting to sputter as the Federal Reserve jacks up interest rates to try to extinguish high inflation running at a 40-year high.

Businesses have cut back on hiring and are likely to continue to do so as the economy slows. Most economists predict unemployment will start to rise from the current level of 3.7%.

Yet the tightest labor market in decades could deter most companies from major layoffs given how hard it is to fill open jobs . They might want to hold onto most of their workers so long as the economy doesn’t fall into a ditch.

Looking ahead: The job-openings report “shows signs of a cooling labor market, perhaps the first definitive evidence in that direction,” said chief economist Stephen Stanley of Amherst Pierpont Securities.

“I will want to see another significant monthly decline in job openings before jumping fully on board with the notion of a loosening labor market,” he added.

Market reaction: The Dow Jones Industrial Average

and S&P 500

rallied again on Tuesday for the second day in a row, rebounding from crushing losses in the prior week.

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