Job Openings Fall in December, Signaling Gradual Labor Market Slowdown
In December, job openings in the United States declined significantly from forecasted figures, reaching a three-month low. This aligns with the ongoing slowdown in the labor market.
The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) revealed a decrease in available positions from a revised 8.16 million in November to 7.60 million. Most economists' estimates in a Bloomberg survey were surpassed by this figure.
Professional and business services experienced a notable downturn in openings, partially offsetting the surge observed over the previous two months. Declines were also observed in healthcare and social assistance, as well as finance and insurance.
The recent dip signals a resumption of the downward trend in job openings after notable increases in recent months. Consequently, wage growth is likely to be subdued, supporting the Federal Reserve's assessment that the job market no longer poses inflationary pressures.
The number of vacancies per unemployed worker, a metric closely monitored by the Fed, remained at 1.1 for the sixth consecutive month. This ratio reached 2 to 1 at its peak in 2022.
Following the report, two-year Treasury yields declined, while stocks maintained their gains.
Bloomberg Economics Analysis:
"The decline in total job openings overstates the rate of labor market cooling. The uptick in quits, stable layoff rate, and increased vacancies in cyclical industries indicate greater labor market stability than the headline change. However, we anticipate that labor demand will continue its gradual cooling trend in the months ahead." - Stuart Paul.
The hiring rate remained steady at 3.4%, among the lowest levels over the past decade. Layoffs remained at historically low levels. The quit rate, measuring the percentage of individuals voluntarily leaving their jobs each month, remained unchanged at 2%. This suggests diminished confidence among individuals in securing new positions compared to previous years.
The government's monthly employment report, scheduled for release on Friday, is predicted to show moderation in hiring during January, with the unemployment rate holding steady at 4.1%. Additionally, the report will include revisions to payroll growth from March 2023 through March 2024, along with updated population estimates from the Census Bureau.
Some economists have raised concerns about the reliability of JOLTS data, attributing it to the survey's low response rate and frequent revisions. A comparable index from job posting platform Indeed indicates a slight increase in job openings in December.
Chris Middleton contributed to this article.