U.S. job openings tumbled in October to the lowest level in more than two years, the latest evidence that the Federal Reserve's interest-rate hike campaign is continuing to cool the labor market.

The Labor Department said Tuesday there were 8.7 million job openings in October, a decrease from the downwardly revised 9.3 million openings reported the previous month. Economists surveyed by Refinitiv expected a reading of 9.3 million.

It marked the lowest level for job openings since March 2021. 

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The Federal Reserve closely watches these figures as it tries to gauge labor market tightness and wrestle inflation under control. 

The central bank has responded to the inflation crisis and the extremely tight labor market by raising interest rates at the fastest pace in decades. Officials have so far approved 11 rate hikes, lifting the federal benchmark funds rate to the highest level since 2001. Policymakers have signaled that additional rate hikes are on the table if economic data points to a resurgence in price pressures.

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However, the softer-than-expected jobs data could give policymakers more space to end their tightening campaign. 

"This is the type of JOLTS report that Fed officials want to see," said zOren Klachkin, financial market economist at Nationwide. "Lower job openings, marginally higher layoffs and steady quits indicate that labor demand and supply are moving into a healthier balance. Fed officials are likely finished raising rates."

Still, job openings remain historically high. Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million. There are roughly 1.5 jobs per unemployed American. 

The number of Americans quitting their jobs, meanwhile, ticked lower to 3.6 million, or roughly 2.3% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.

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Switching jobs has been a windfall for many workers over the past year: Job-switchers saw their real hourly wage increase 6.6% in September, compared to a 5.3% pay increase for workers who stayed in the same job, according to recent Atlanta Fed data.

The report also indicated that layoffs were largely unchanged last month, hovering around 1.55 million.