By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job openings increased less than expected in September while hiring fell, suggesting the labor market recovery was petering out even before a resurgence in new COVID-19 cases which is expected to slow momentum.

Though the Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS report on Tuesday showed layoffs decreasing to their lowest level in nearly 20 years, there was more than one person competing for a single vacancy. The drop is at odds with significantly high weekly unemployment claims.

The worst economic crisis since the Great Depression, marked by tens of millions of Americans on unemployment benefits, is one of the biggest challenges confronting President-elect Joe Biden when he takes over from President Trump next January.

"It's hard to see any signs of backsliding, but there aren't any signs of acceleration in the recovery either," said Nick Bunker, director of research at Indeed Hiring Lab. "In a labor market with 10 million fewer jobs than February, we need to see hiring moving at a faster clip to avoid lasting damage."

Job openings, a measure of labor demand, were up 84,000 to 6.4 million on the last day of September. Vacancies remained below their 7 million level in February.

Economists polled by Reuters had forecast job openings rising to 6.5 million in September.

Stocks on Wall Street were trading mostly lower. The dollar was steady against a basket of currencies. U.S. Treasuries fell.

The United States is setting daily records for coronavirus cases, which could force state and local governments to impose new restrictions on businesses like restaurants, bars and gyms.

Even without restrictions, consumers fearing exposure to the respiratory illness are likely to stay away, which would hurt demand and hiring. At the same time, economic growth is slowing after a massive boost from fiscal stimulus, which has run out. The economy plunged into recession in February.

There were increases in job openings in financial activities, professional and business services, health care and social assistance, and leisure and hospitality industries. Federal government job openings decreased 20,000.

The job openings rate was unchanged at 4.3% in September.

"The virus count is hitting records however so it is questionable, given the new mini-lockdowns in many states, whether as many jobs will be required in the future at bars and restaurants, sporting events, museums and amusement parks," said Chris Rupkey, chief economist at MUFG in New York.