Job Openings Fall Amidst Labor Market Cooling
In a decline exceeding analyst estimates, job openings reached their lowest level since September in December, signaling possible labor market moderation. The Bureau of Labor Statistics reported 7.6 million available positions at month-end, a significant drop from November's 8.15 million. This marks the largest sequential decline in openings since October 2023.
Economists had anticipated 8 million vacancies in December, according to a Bloomberg survey. Nancy Vanden Houten, lead US economist for Oxford Economics, described the data as reflective of "a familiar picture of the labor market," characterized by low layoffs and gradual hiring.
The Job Openings and Labor Turnover Survey (JOLTS) also indicated a rise in hires to 5.46 million in December, compared to 5.37 million the previous month. The hiring rate remained unchanged at 3.4% for the third consecutive month.
The quits rate, an indicator of worker confidence, held steady at 2% in December. Both quits and hiring rates continue to be below pre-pandemic levels.
In recent remarks, Fed Chair Jerome Powell characterized the labor market as "broadly stable," contributing to the central bank's decision to pause interest rate reduction.
Vanden Houten notes that the JOLTS report aligns with the Fed's assessment of a resilient labor market. She predicts the removal of a March rate cut from their baseline forecast.
As of Tuesday, markets indicate a less than 50% probability of the Fed lowering rates before June. This week's economic calendar features several crucial labor market reports, culminating in Friday's January jobs report. Forecasts suggest the creation of 170,000 jobs and an unemployment rate of 4.1%.