. Job Market Insights: December Surprises with Rising US Openings

Job Market Insights: December Surprises with Rising US Openings

Job Market Insights: December Surprises with Rising US Openings

31 Jan 2024

US job openings unexpectedly rise, but resignations decreasing.

Unexpectedly, job openings in the United States rose in December, and the data for the previous month was revised upward. This indicates that the labor market is likely still robust, making it less probable for the Federal Reserve to initiate interest rate cuts in the first quarter.

However, the labor market is gradually cooling, as indicated by Tuesday’s report from the Labor Department. It revealed that Americans are increasingly remaining in their current positions, potentially contributing to a slowdown in wage growth. Additionally, the number of people resigning from their jobs, possibly in search of better opportunities, was the lowest in nearly three years.

There were 1.44 job openings for every unemployed person, remaining constant from November but down from the two-job ratio observed in March 2022 when the U.S. central bank initiated rate hikes.

Federal Reserve officials are anticipated to maintain the current interest rates after the conclusion of a two-day policy meeting on Wednesday. This decision aligns with the backdrop of a robust economy, supported by the resilient labor market and sustained consumer spending. The likelihood of a rate cut in March, as perceived by financial markets, has diminished to well below 50%.

According to the Bureau of Labor Statistics’ monthly Job Openings and Labor Turnover Survey (JOLTS) report, job openings, a gauge of labor demand, increased by 101,000 to reach 9.026 million on the final day of December.

Revised data for November indicated a higher number of unfilled positions at 8.925 million, compared to the initially reported 8.79 million. Economists surveyed by Reuters had predicted 8.75 million job openings for November.

Job openings reached a historic high of 12.0 million in March 2022. Despite a more restrictive monetary policy, demand for labor has remained reasonably robust. Since March 2022, the Federal Reserve has increased its policy rate by 525 basis points, bringing it to the current range of 5.25%-5.50%.

In December, the professional and business services sector saw an additional 239,000 job openings.

There were significant rises in job openings observed in the manufacturing, retail trade, healthcare and social assistance, as well as financial activities sectors. Conversely, unfilled positions declined by 121,000 in the accommodation and food services industry and dropped by 83,000 in the wholesale trade sector.

The hiring rate increased from 3.5% to 3.6% in December. Layoffs rose by 85,000 to a relatively low figure of 1.616 million. The increase was driven by job losses in the transportation, warehousing, and utilities sectors, which experienced a surge in business during the COVID-19 pandemic.