The number of job vacancies dropped to 8.8 million last month, the Labor Department said Tuesday, the fewest since March 2021 and down from 9.2 million in June. Yet the drop appeared to be even steeper because June’s figure was initially reported as 9.6 million. That figure was revised lower Tuesday.

July’s figure was still healthy historically—before the pandemic the number of openings had never topped 8 million. And there are still roughly 1.5 available jobs for each unemployed worker, which is also elevated but down from a peak last year of 1.9.

“While it might take more time, more applications, and stronger job interview performances to land a job than it did in 2021 and 2022, there are still plenty of jobs going unfilled,” said Julia Pollak, chief economist at ZipRecruiter.

Fewer Americans also quit, with 3.5 million people leaving their jobs last month, down from 3.8 million in June, the lowest since February 2021. Most Americans quit work for other, better-paying jobs, and during and after the pandemic there was a big spike in quitting as workers sought higher pay and benefits elsewhere.

Wall Street rallied on signs that the job market is cooling, with the S&P 500 index surging 1.1% and the Dow Jones industrial average gaining 0.6%.

The job openings figures “cast further doubt on the idea that the Fed will need to keep rates high for longer,” Andrew Hunter, deputy chief U.S. economist at Capital Economics, said in a note. “With the job quits rate now below its pre-pandemic peak and the job openings rate also rapidly approaching that level, labour market conditions have mostly normalised.”

“With productivity growth now returning to its pre-pandemic trend…the upshot is that the Fed’s job is already done,” he added.

A separate report Tuesday also showed that consumers were less confident in the economy last month, a trend that could cool consumer spending in the coming months.

Fewer openings mean lower pay

The Federal Reserve will likely welcome Tuesday’s data, because fewer job openings and less quitting reduces pressure on employers to raise pay to find and keep workers. Pay raises are great for employees, but many companies have cited increased pay demands as reasons to raise prices, which can fuel inflation.

Evidence that the economy is slowing, on top of a steady decline in inflation from its peak of 9.1% in June 2022 to 3.2% last month, could prompt the Fed to skip a rate hike at its next meeting in September.

Federal Reserve Chair Jerome Powell and other Fed officials have hoped that a steady drop in the number of job openings could help bring down inflation, without requiring the layoffs that many economists have warned would be necessary to rein in prices.

“So far, job openings have declined substantially without increasing unemployment — a highly welcome but historically unusual result that appears to reflect large excess demand for labor,” Powell said in a high-profile speech Friday at the Fed’s annual conference in Jackson Hole, Wyoming. But it isn’t clear whether the decline will persist, he said, “and this uncertainty underscores the need for agile policymaking.”

Later this week, the government will issue its jobs report for August, which economists forecast will show that employers added 170,000 jobs this month. While that would be a solid increase, it would be the smallest in almost three years, and also point to a potential softening in the economy.