A “now hiring” sign is displayed outside Taylor Party and Equipment Rentals in Somerville, Massachusetts, U.S., Sept 1, 2022. REUTERS/Brian Snyder/File photo
WASHINGTON -U.S. job openings dropped to more than a 2-1/2-year low in October, the strongest sign yet that demand for labor was cooling amid higher interest rates.
The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday also showed that there were 1.34 vacancies for every unemployed person in October, the lowest since August 2021. There were fewer resignations, with workers generally staying put at their jobs, which over time could help to ease wage inflation.
Combined with data last week showing inflation subsiding in October, it bolstered optimism that the Federal Reserve was probably done raising interest rates this cycle, with financial markets and economists even anticipating a rate cut in mid-2024.
“These data will be welcome news for policymakers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “The data support our view that rates are at a peak and the Fed’s next move will be a rate cut, likely in second quarter of 2024.”
Job openings, a measure of labor demand, fell 617,000 to 8.733 million on the last day of October, the lowest level since March 2021, the Labor Department’s Bureau of Labor Statistics said. Data for September was revised lower to show 9.350 million job openings instead of the previously reported 9.553 million.
Economists polled by Reuters had forecast 9.30 million job openings in October. The largest monthly decline in vacancies since May was led by the health care and social assistance sector, where unfilled jobs dropped by 236,000.
Job openings decreased by 168,000 in the finance and insurance industry, while real estate, rental and leasing had 49,000 fewer positions. But job openings increased by 39,000 in the information sector.
The job openings rate dropped to 5.3 percent from 5.6 percent in September. Hiring slipped 18,000 to 5.886 million. Hiring dropped 110,000 in the accommodation and food services industry, which had been the biggest driver for job growth since the recovery from the COVID-19 pandemic. The hires rates dipped to 3.7 percent from 3.8 percent in the prior month.
READ: Moderate US job growth slowdown expected in September
Resignations slipped 18,000 to 3.628 million. The quits rate, viewed as a measure of labor market confidence, was unchanged at 2.3 percent for the fourth consecutive month. Declining quits point to slower wage growth and ultimately price pressures in the economy.
The Fed is expected to leave rates unchanged next Wednesday. Since March 2022, the central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25 percent-5.5 percent range. Though the labor market is slowing, it is only doing so only gradually.
READ: With Fed likely done hiking rates, Waller flags pivot ahead
Layoffs rose 32,000 to a still-low 1.642 million in October. The layoffs rate was unchanged at 1 percent.
The government is expected to report on Friday that nonfarm payrolls increased by 185,000 jobs in November, according to a Reuters survey of economists, boosted by the return of about 33,000 striking United Auto Workers union members. Payrolls increased by 150,000 positions in October.
November’s anticipated job count would be below the average monthly gain of 258,000 over the prior 12 months.