America’s employers posted 8.8 million job openings in November, down slightly from October and the fewest since March 2021. But demand for workers remains strong by historical standards despite higher interest rates.
Quick Read
- Decline in Job Openings: In November, the United States saw a slight decrease in job openings to 8.8 million, the lowest since March 2021. Despite this dip from the 8.9 million in October, the demand for workers remains high historically.
- Labor Market Confidence: The Labor Department’s report indicated a decrease in the number of people quitting their jobs, reaching the lowest level since February 2021. This number is now approximately at the pre-pandemic level.
- Sector-Specific Changes: Job openings in transportation, warehousing, utilities, hotels, and restaurants saw reductions. In contrast, there were increases in construction and retail job openings.
- Job Market Remains Strong: Despite a slowdown from earlier peaks, the job market is still robust, with layoffs remaining at unusually low levels.
- Impact of Rising Interest Rates: Following the Federal Reserve’s rate hikes, job openings have gradually declined since reaching a record 12 million in March 2022. Yet, they are still at levels historically considered high.
- Federal Reserve’s Strategy: The Fed has increased its benchmark interest rate 11 times since March 2022 to combat inflation. The goal is to cool the job market to reduce wage and price pressures. A decrease in job openings is seen as a less harsh measure compared to layoffs.
- Potential for ‘Soft Landing’: Indications suggest the Fed may be achieving a ‘soft landing’, avoiding recession while controlling inflation. The unemployment rate is low at 3.7%, and job additions remain healthy.
- Inflation and Wage Trends: Inflation has slowed down, with a 3.1% increase in November year-over-year, compared to a 9.1% mid-2022 peak. Wage and inflation pressures are also decelerating.
- Fed’s Outlook on Interest Rates: The Fed, after maintaining its benchmark rate for three consecutive meetings, anticipates cutting rates three times in 2024.
- Economist’s Perspective: Economists view the labor market as strong but cooling, bringing demand into better balance with supply. This trend aligns with the Federal Reserve’s policy direction and its plans for future rate adjustments.
The Associated Press has the story:
US job openings fell slightly in November but remain high by historical standards
Newslooks- WASHINGTON (AP)
America’s employers posted 8.8 million job openings in November, down slightly from October and the fewest since March 2021. But demand for workers remains strong by historical standards despite higher interest rates.
Wednesday’s report from the Labor Department showed that the number of job vacancies dipped from 8.9 million in October. It also showed that the number of people quitting their jobs — a sign of confidence in the labor market — fell to its lowest level since February 2021. The number of quits is now roughly where it stood before the pandemic erupted nearly four years ago.
In November, job openings dropped by 128,000 in transportation, warehousing and utilities and by 78,000 at hotels and restaurants. The federal government reduced job openings by 58,000. By contrast, openings in construction rose by 43,000 and in retail by 42,000.
Wednesday’s report, called the Jobs Openings and Labor Turnover Summary, reinforced other recent evidence that while the job market is slowing from its robust heights, it remains solid. Layoffs, for example, are still at unusually low levels.
In the face of rising interest rates, job openings have gradually but steadily declined since peaking at a record 12 million in March 2022. But they remain at historically high levels: Before 2021, monthly job openings had never topped 8 million.
The inflation fighters at the Federal Reserve have raised their benchmark interest rate 11 times since March 2022 to a 22-year high of about 5.4%. They would like to see the job market cool from the red-hot levels of the past couple of years, thereby reducing pressure on businesses to raise pay — and prices. Compared with outright layoffs, a decline in job openings is a relatively painless way for that to happen.
So far, the Fed appears to be on track for a so-called soft landing — avoiding a recession while slowing economic activity enough to conquer high inflation.
The unemployment rate is currently 3.7%, not far above a half-century low. Through November of last year, American employers added a healthy 232,000 jobs a month. The December jobs report, which the government will issue Friday, is expected to show that the economy added 155,000 jobs — still a decent number — last month.
And inflation is decelerating: Consumer prices were up 3.1% in November from 12 months earlier, down from 9.1% in mid-2022, though it remains above the Fed’s 2% target.
The central bank, which has left its benchmark interest rate unchanged for three straight meetings, has signaled that it expects to cut rates three times in 2024.
“Overall, the labor market remains strong, but demand is cooling, coming into better balance with supply,’’ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “And wage and inflation pressures are decelerating. These data will be welcome news for policymakers and support the Fed’s view that the next move in rates will be lower.’’
