The news:
Job openings fell significantly in October, reaching their lowest level since March 2021, the Labor Ministry announced Tuesday.
There were 8.7 million job openings in October, down significantly from 9.3 million in September. according to Survey of job vacancies and labor turnover. This is lower than the expectations of economists who predicted 9.3 million openings.
The layoff rate was little changed, as was the quit rate, which generally reflects workers’ confidence in their ability to find new employment.
Why it matters: The state of the labor market affects interest rate policy.
The labor market is being closely watched by the Federal Reserve as it considers its interest rate policy. The labor market slowdown tends to fuel expectations that the Fed will not further raise rates, which have risen from near zero in March 2022 to a range of 5.25 to 5.5 percent.
The labor market has been surprisingly resilient since the Fed began raising rates as part of a campaign to bring inflation under control. But as the job market shows signs of slowing, consumer spending is also following its trend. Many companies told investors that in the most recent quarter, customers were pulling back and spending less on products and more on services and experiences. The Fed’s preferred measure of inflation confirmed that consumer spending slowed in October.
At the same time, investors are increasingly hopeful that the Fed will be done raising rates. Jerome H. Powell, Chairman of the Federal Reserve, recently suggested in a speech that the central bank would keep rates unchanged if data continued to indicate a slowdown in the economy.
Context: Unemployment and job openings have returned to previous levels.
Even though the job market is slowing, there remains a healthy landscape for workers. The unemployment rate increased slightly in October, reaching almost 4%, in line with pre-pandemic levels.
Job postings reached a record high of more than 12 million in March 2022 and have been trending downward since. The last time job postings hovered around nine million – where they currently stand – was in the spring of 2021.
Although inflation has slowed significantly since the Fed began raising rates in March 2022, it remains above the central bank’s 2% target.
The Fed’s preferred measure of inflation fell to 3% in October from a year earlier. But without including food and fuel prices, which are volatile and less sensitive to Fed policy actions, the rate was 3.5%.
What’s next: The November jobs report arrives Friday.
The November jobs report will be released Friday by the Labor Department. Economists expect the unemployment rate to remain around 4 percent, with around 180,000 jobs created.
This report will be one of the last snapshots of the state of the labor market before the Fed’s next policy meeting on December 12-13.