Economic Indicators

US job openings stay elevated, layoffs hit nine-month low

2023.11.01 13:21


© Reuters. FILE PHOTO: People wait in a line outside a newly reopened career center for in-person appointments in Louisville, Kentucky, U.S., April 15, 2021. REUTERS/Amira Karaoud/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings increased in September, pointing to persistent labor market tightness that is supporting the economy and likely to see the Federal Reserve keeping interest rates higher for a long time to cool demand.

The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Wednesday also showed layoffs dropping to a nine-month low. There were 1.50 job openings for every unemployed person in September, slightly up from 1.49 in August and way above the pre-pandemic ratio of 1.2.

Fed officials were due to conclude their latest two-day policy meeting on Wednesday. The U.S. central bank is expected to leave rates unchanged but maintain its hawkish bias as a recent spike in U.S. Treasury yields and stock market sell-off have tightened financial conditions.

“Demand in the overall economy is not slowing down and Fed officials will question whether they have done enough,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The market has taken rate hikes down off the table for this year, but for how long if the labor market remains tight.”

Job openings, a measure of labor demand, were up 56,000 to 9.553 million on the last day of September. Data for August was revised lower to show 9.497 million job openings instead of the previously reported 9.610 million. Economists polled by Reuters had forecast 9.250 million job openings in September.

There were an additional 141,000 job openings in accommodation and food services industry. Unfilled jobs increased 39,000 in the arts, entertainment and recreation sector. But vacancies declined by 124,000 in other services. Job openings dropped 43,000 in federal government and there were 41,000 open positions in the information industry.

The job openings rate was unchanged at 5.7%. Hiring increased 21,000 to 5.871 million, indicating that some companies continued to experience difficulties finding workers. The hires rates was unchanged at 3.7%.

Labor market resilience is driving economic growth, keeping a much dreaded recession at bay. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

Stocks on Wall Street were trading higher. The dollar was steady against a basket of currencies. U.S. Treasury prices rose, with the yield on the benchmark 10-year Treasury note falling below 4.8% for the first-time in two weeks.

RESIGNATIONS EBB

Layoffs dropped 165,000 to 1.517 million, the lowest level since December 2022. There were notable declines in job losses in construction, manufacturing, professional and business services as well as state and local government education.

Americans are staying put at their jobs, which could help to ease wage inflation. The number of people quitting their jobs fell 2,000 to 3.661 million. The quits rate, viewed as a measure of labor market confidence, was unchanged at 2.3%.

“Quitting activity has normalized to pre-pandemic levels consistent with a tight labor market but companies remain extremely reluctant to fire workers,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

While the JOLTS report suggested that labor market conditions remain tight, a survey from the Institute for Supply Management (ISM) on Wednesday suggested companies could be holding back on hiring. The ISM said its measure of factory employment declined sharply in October.

According to the ISM, responses from companies in the survey “indicate a slowdown in hiring,” and “an increase in staff reduction activity.” It also noted that “attrition, freezes and layoffs to reduce head counts increased during the period, with layoffs the primary tool, indicating a more urgent need to reduce staffing.”

But strikes by the United Auto Workers (UAW) union against Detroit’s Big Three car makers could also have contributed to the sharp decline in the ISM gauge of factory employment. The ISM’s manufacturing PMI dropped to 46.7 in October from 49.0 in September. Economists had forecast the index unchanged at 49.0.

The UAW work stoppages at assembly plants owned by Ford Motor (NYSE:), General Motors (NYSE:) and Chrysler parent Stellantis (NYSE:) across the country, disrupted supply chains and forced automakers to furlough and lay off thousands of non-striking workers. The automakers have since reached tentative agreements with the UAW.

The industrial action likely reduced manufacturing payrolls in October. The government reported last week that there were at least 30,000 UAW members on strike during the period it surveyed business establishments for October’s employment report.

According to a Reuters survey of economists factory payrolls likely declined by 10,000 jobs last month after increasing 17,000 in September. That would contribute to lowering overall nonfarm payrolls gains to 180,000 jobs from 336,000 in September. Employment would still be more than double the roughly 100,000 needed per month to keep up with growth in the working age population. The government will publish October’s employment report on Friday.

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