About those blockbuster jobs reports: They're over

Evidence is mounting that the jobs recovery's best days are in the rear view mirror.

Recent Labor Department indicators show that the employment market is tightening, with both fewer job openings and workers willing to leave their current jobs for better environs.

The Job Opening and Labor Turnover Survey, released last week, adds to signs that the market is maturing, and signals to Wall Street that hopes for future blockbuster nonfarm payrolls reports should be tempered.

"Don't expect the employment situation report to print nonfarm payrolls above 200,000 going forward," market strategists at New York-based brokerage Convergex said in a report. "The last two readings fell below that threshold and, unless more highly educated individuals enter the workforce, it's likely to stay there."

Indeed, the most recent payrolls reports have been lackluster, to say the least.

Workers sort citrus at a packing house in Tulare County. California farms and ranches received $46.4 billion for their output in the 2013 crop year, according to the USDA.
Qin Chen | CNBC
Workers sort citrus at a packing house in Tulare County. California farms and ranches received $46.4 billion for their output in the 2013 crop year, according to the USDA.

The September number showed just 142,000 new positions created, far less than the more than 200,000 economists had expected. August was even worse, with just 136,000 jobs, and though July's came in at a more respectable 223,000, that number was revised down from 245,000.

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Those numbers have brought average monthly job creation in 2015 down to 198,000 from 2014's 260,000, with the last three months posting an average of just 167,000 new positions.

Last week's JOLTS report showed more reason to believe the employment momentum has slowed.

Job openings fell 5.3 percent in August, while a 2.6 percent rise in layoffs and discharges offset a 0.3 percent gain in hires. Finally, the amount of quits — or what Convergex calls its "take this job and shove it" indicator because it shows the percentage of workers who left positions voluntarily — fell to 56.6 percent from 57.1 percent, indicating less confidence in mobility.

Read More Job openings decrease to 5.4 million in August

That said, a tightening labor market can have some positive ramifications, though not to the 7.9 million Americans considered part of the labor force but not currently working.

If hiring actually is near a peak, theory at least would suggest that wage growth should start to pick up as the labor pool shrinks. That would be welcome news considering the current annual salary gain rate is just 2.2 percent after edging lower in September.

"The competition in the jobs market is switching from those trying to find work to those trying to hire," David Rosenberg, senior economist and strategist at Gluskin Sheff, said in a note to clients Monday. "The labor market is increasingly tight and this points to acceleration in wage growth being in the cards."

Rosenberg pointed to a statistical anomaly: The 3.6 percent job opening rate, which has held since April, would be consistent historically with a 3.1 percent unemployment rate, as opposed to the current 5.1 percent rate (10 percent when accounting for the underemployed and those who have quit looking).

A number of inefficiencies are at play, namely a skills mismatch, where companies can't find the right workers to fill openings, as well as a labor force participation rate that is the lowest since October 1977.

"The unemployment rate is not high due to a cyclical drop in demand (for) workers, but rather due to more structural issues on the supply side (such as skills or geographic mismatches)," Rosenberg said.

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All of this, of course, is being watched by the Federal Reserve. Janet Yellen, the chair of the Federal Open Market Committee, is believed to be a close watcher of the JOLTS data.

The Fed is looking for signs of inflation building before it will lift its key interest rate off zero, where it has been stuck since late 2008. Markets currently believe the Fed will be on hold throughout 2015, with futures indicating just a 29 percent chance of a December hike.

March is currently considered the most likely date for liftoff as the Fed watches the labor numbers for signs of wage increases.