The U.S. Bureau of Labor and Statistics’ Job Openings and Labor Turnover Survey (JOLTS) report,  adjusted to focus on firms with over 250 employees, shows a similar slowdown in hiring over the past two years.

“Aligning the two data series to focus on the same firm-size segment of the labor market allows for a more concise and practical comparison,” said Vanguard investment analyst David Pakula.

Although national figures on job losses and layoffs are still at historically low levels, lower hiring rates coupled with strong labor force growth have driven the unemployment rate higher, from 3.7% at the start of the year to 4.2% in August.

Vanguard’s labor economist Adam Schickling says that it’s important to understand what is driving the increase in the unemployment rate. “The U.S. has experienced higher-than-expected labor supply growth over the past two years,” said Schickling. “New entrants to the labor force generally have a higher unemployment rate because it takes time for them to find a job. This explains why the unemployment rate has risen over the past year even as job losses have not materially increased. It’s also important to note that this growth in labor supply has played a critical role in helping the Fed combat inflation.”