- Job offers fall by 617,000, to 8,733 million in October
- There were 1.34 job offers for every unemployed person
- Dropout rate remains unchanged at 2.3% for the fourth consecutive month
WASHINGTON, Dec 5 (Reuters) – U.S. job openings fell to a more than 2-1/2-year low in October, the strongest sign yet that higher interest rates were curbing demand for workers. and driving financial markets’ expectations about the Federal Reserve’s monetary policy. The cycle of policy tightening was over.
The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, also showed on Tuesday that there were 1.34 job openings for every unemployed person in October, the lowest level since August 2021 and below the 1.47 in September. Fewer workers are quitting, which over time could help alleviate wage inflation.
The larger-than-expected decline in job vacancies came after data last week showed inflation eased in October. The series of inflation-friendly reports has led financial markets to anticipate a rate cut as early as March next year.
“This data will be good news for policymakers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “The data supports our view that rates are at their peak and that the Fed’s next move will be a rate cut, likely in the second quarter of 2024.” Job openings, a measure of labor demand, fell by 617,000 to 8.733 million on the last day of October, the lowest level since March 2021 and below 9.35 billion in September, the department’s Bureau of Labor Statistics said. of work.
Economists polled by Reuters had forecast 9.30 million job vacancies in October. The largest monthly drop in vacancies since May was led by the health care and social assistance sector, where vacant positions fell by 236,000.
Job openings decreased by 168,000 in the finance and insurance industry, while the real estate, rental and leasing sector had 49,000 fewer positions. But job offers increased by 39,000 in the information sector. The job opening rate fell to 5.3% from 5.6% in September. The decline in vacancies occurred in all four regions, with steeper declines in the South and Midwest.
Hiring fell by 18,000, to 5.886 million. Hiring fell by 110,000 people in the accommodation and food services industry, which had been the biggest driver of job growth since the recovery from the pandemic. Hiring rates fell to 3.7% from 3.8% the previous month.
Resignations fell by 18,000, to 3.628 million. The quit rate, seen as a measure of labor market confidence, was unchanged at 2.3% for the fourth month. The decline in resignations points to slower wage growth and ultimately price pressures in the economy.
“The current state of the labor market suggests that no further recalibration is necessary to restore balance,” said Nick Bunker, director of economic research at Indeed Hiring Lab.
Stocks on Wall Street were mixed. The dollar gained against a basket of currencies. US Treasury prices rose.
FED ON STANDBY
The Federal Reserve is expected to leave rates unchanged next Wednesday. Since March 2022, the central bank has raised its benchmark overnight rate by 525 basis points to the current 5.25%-5.50%.
Although the labor market is relaxing, it is doing so gradually. Layoffs rose by 32,000 to a still-low 1.642 million in October, amid increases in the transportation, warehousing and utilities industry, as well as the health care and social assistance sector. The layoff rate remained unchanged at 1.0%.
“A reduction in job openings is making a much larger contribution to reducing excess demand for labor rather than increasing unemployment,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York.
A separate report from the Institute for Supply Management showed that services employment grew in November for the sixth straight month after contracting in May. The ISM said employers reported losing “employees due to normal attrition” and “are having trouble filling these positions.” They also described the job market as still “very competitive” and “trying to get to full staffing levels.”
The ISM headline services PMI rose to 52.7 in November from 51.8 in October, recording its 11th consecutive month of expansion.
Feedback from companies was mixed. The lodging and food service industries expected restaurant sales and traffic trends to “pick up again in December.” Health care and social assistance companies reported that “signs of recovery are on the horizon,” while the construction sector said opportunities remain “strong.”
But companies in the professional, scientific and technical services industry reported that “fourth quarter revenue is lower than projected.” Public administration companies said that “prices of most items are increasing, but only slightly.”
The government is expected to report on Friday that nonfarm payrolls rose by 185,000 jobs in November, according to a Reuters poll of economists, boosted by the return of about 33,000 striking United Auto Workers union members. Payrolls increased by 150,000 positions in October.
The projected job count for November would be below the average monthly increase of 258,000 over the previous 12 months. While economic activity is cooling in the fourth quarter, a recession is unlikely. Most economists project tepid growth after the economy grew at an annualized rate of 5.2% in the third quarter.
“Many of the downside risks to the fourth quarter that worried economists a few weeks ago – the war in the Middle East, the government shutdown and the UAW strike – appear to exert only modest and short-lived headwinds for the growth,” he said. Bill Adams, chief economist at Comerica Bank in Dallas.
Information by Lucía Mutikani; Editing by Chizu Nomiyama.
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