Inflation may be showing signs of cooling down, but the white-hot US job market has been a thorn in the side of the Federal Reserve Bank in its effort to curb rising prices. With employers competing to fill positions and retain workers, wages have increased, driving up prices for goods and services.
However, the latest Job Openings and Labor Turnover Survey published by the Labor Department shows that there were 8.7 million job openings in October, down significantly from 9.3 million in September and below economists’ expectations of 9.3 million. It is at its lowest level since March 2021. It also showed that there were 1.34 vacancies for every unemployed person in October, the lowest since August 2021 and down from 1.47 in September. The decline was primarily driven by a weakened demand for workers in the healthcare, finance, and real estate sectors, offsetting an uptick in positions in information services. The job openings rate dropped to 5.3% from 5.6% in September. The decline in vacancies was in all four regions, with steeper decreases in the South and Midwest.
Despite its softening, the US job market remains strong. The rate of layoffs held steady at 1.6 million, as was the rate of quitting, which generally reflects workers’ confidence in their ability to find new employment. In addition, the hiring rate remained unchanged in October despite the decline in openings. “The current state of the labor market suggests no further recalibration is necessary to bring the labor market back into balance,” said Nick Bunker, director of economics research at Indeed Hiring Lab.
The Fed’s Next Move
A cooling job market may be just what the Federal Reserve Bank needs to keep interest rates unchanged at its next policy meeting scheduled to take place on December 12-13.
The Labor Department will release its November job reports on Friday, bringing more insight into the state of the job market. Economists forecast that the unemployment rate will stay around 4%, with a gain of about 180,000 jobs. “With this evidence coming in that the labor market is cooling substantially, I think it’s raising the chances that the Fed is done with the rate hikes,” said Julia Pollak, chief economist at ZipRecruiter. However, policymakers will likely continue to keep a close eye on various indicators before deciding to lower interest rates as inflation, particularly when stripped from the more volatile expenditures on food and energy, remains higher than the targeted 2% rate.
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or drop us an email.
