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U.S. job openings fell in October to their lowest level since early 2021, underscoring a further cooling in the labor market just as the Federal Reserve would like.

The Job Openings and Labor Turnover Survey (JOLTS) released by the Bureau of Labor Statistics on Tuesday showed the number of job openings fell to 8.7 million from a downwardly revised 9.4 million the previous month.

The figure was lower than all economists surveyed had expected, and the decline was broad-based across industries.

As the Fed keeps interest rates high, policymakers are hoping that the cooling in the labor market will come through a reduction in demand for new hires rather than layoffs.

So far, the idea has mostly worked. The number of job openings has fallen from a peak of 12 million last year, and the unemployment rate remains historically low, though it has climbed in recent months.

Wells Fargo (44.49, -0.63, -1.40 percent) said a separate report on Tuesday showing slower service sector inflation suggests the Fed's two mandates of employment and price stability are both moving toward longer-run expected levels.

"While prices are still rising, the rate of increase has slowed and the labor market has become less tight, so there is less upward pressure on wages," economists Tim Quinlan and Shannon Seery Grein said in the report.

Quit rate

At last year's peak, more than 4 million Americans were leaving their jobs each month, reflecting confidence in their ability to land new positions, often with much higher pay.

For the fourth month in a row, the quits rate remained at its lowest level since early 2021.

JOLTS data showed layoffs remained at historically low levels and hiring slowed.

The data bolstered expectations that the Federal Reserve will keep interest rates unchanged at its policy meeting next week.

However, Fed Chairman Jerome Powell is still likely to play down market bets on rate cuts until it is clear that inflation is on a sustainable path to decline.

The ratio of job openings to unemployment fell to 1.3, the lowest since mid-2021.

While still somewhat indicative of a tight labor market, that number has fallen sharply over the past year.

With employers scaling back hiring and wage growth decelerating, it is unclear how much longer the job market can support strong consumer spending.

In just a few days, the U.S. government will release its nonfarm payrolls report, which is expected to show 189,000 jobs were added in November. The unemployment rate is expected to remain at its highest level in nearly two years.

Some economists question the reliability of the job vacancy data, in part because of the survey's low response rate.