U. S. job market has reached record of 11 million vacancies
2023.02.01 14:43
U. S. job market has reached record of 11 million vacancies
By Ray Johnson
Budrigannews.com – In spite of rising concerns about a recession and higher interest rates, job openings in the United States unexpectedly increased in December, indicating that demand for labor remains strong. This could keep the Federal Reserve on its path of policy tightening.
According to Wednesday’s Job Openings and Labor Turnover Survey, or JOLTS report, there were 1.9 job openings for every unemployed person in December.
When policymakers concluded a two-day meeting later on Wednesday, expectations that the U.S. central bank would raise its policy rate by 25 basis points were unchanged, further slowing the pace of the Fed’s rate hikes.
Christopher Rupkey, chief economist at FWDBONDS in New York, stated, “This could well be the first recession in history without material job losses.” The fact that the labor market is not cooling at all is a benefit to the Fed because inflation pressures are decreasing.
On December 31st, job openings, a measure of demand for labor, increased by 572,000 to a five-month high of 11.0 million.
Some economists believed that December’s surge was only temporary due to the concentration of vacant positions in retail trade and the leisure and hospitality sector. Others speculated that the data had been difficult to adjust for seasonal variations, which led to an overestimation of job openings.
Matthew Martin, a U.S. economist at Oxford Economics in New York, stated, “The leisure and hospitality sector accounted for three-quarters of the total increase, rising to its highest level since December of 2021,” which was followed by a sharp decline in January 2022. “A pattern we expect to emerge in next month’s report.”
“A decrease in the rate of seasonal hiring around the holidays is in contrast to a rise in job openings in the retail sector.”
The lodging and food service sector had an additional 409,000 vacant positions. The industry’s employment level is still lower than it was before the pandemic. Retail trade reported 134,000 additional job openings. There were 82,000 more job openings in construction, which has been hit hard by higher borrowing costs.
The rate of open positions increased to 6.7% from 6.4% in November. The number of people hired rose from 6.0 million the month before to 6.2 million. The hires rate increased from 3.9% in November to 4.0%. Wage growth may continue to be strong despite slowing in the fourth quarter due to hiring lag.
Wall Street stocks were trading lower. The dollar lost ground against a group of currencies. The prices of US Treasurys went up.
The Fed increased its policy rate by 425 basis points last year, moving it from a range of 4.25 percent to 4.50 percent—the highest since late 2007. Economists anticipate a recession in the second half of the year as a result of the aggressive tightening of the monetary policy. The housing market has plummeted, and the manufacturing downturn is getting worse.
The Institute for Supply Management (ISM) released a separate report on Wednesday that revealed that its manufacturing PMI decreased to 47.4 in January from 48.4 in December. The index fell below the 48.7 level, which is thought to be indicative of a recession in the economy as a whole, after the third consecutive month of contraction.
Only transportation equipment, one of the six largest manufacturing sectors, reported growth. Manufacturers’ responses varied, with some stating that business was “still strong” and others that “sales have dropped.”
The factories did not appear to be laying off a lot of workers despite the worsening conditions. “As they are positive about the second half of the year,” according to the ISM, businesses “are indicating that they are not going to substantially reduce head counts.”
The JOLTS report showed that 1.5 million people were laid off in December, up from 1.4 million in November. From 0.9% the month before, the rate of layoffs increased slightly to 1.0%. In December, employees also continued to leave their jobs on their own accord. The quits rates, which are regarded as a gauge of confidence in the labor market, remained unchanged at 2.7%.
After rising by 253,000 in December, private employment increased by 106,000 in January, according to a third report, well below economists’ expectations of 178,000. However, the ADP National Employment report blamed bad weather in the middle of January, including flooding in California, for the weaker-than-expected private payrolls gain.
According to economists, the fact that bad weather was holding back hiring did not explain the 95,000 jobs added in leisure and hospitality last month.
The ADP report, which was made with the help of the Stanford Digital Economy Lab, was made before the Labor Department’s more in-depth and much-watched January employment report came out on Friday.
In the employment report released by the Labor Department, ADP has not been an accurate predictor of private payrolls. Nonfarm payrolls likely increased by 185,000 jobs in January, after rising by 223,000 in December, according to a Reuters survey of economists.
Goldman Sachs (NYSE) economists stated that they did not anticipate a significant impact from the California flooding or the winter weather on the employment report for January.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York, stated, “We caution against extrapolating.” Overall, the BLS data show that the economy continues to create jobs at a rapid rate and that, despite the rapid rise in interest rates, the labor market is only gradually softening.”
