U.S. job openings near three-year low; manufacturing remains weak
WASHINGTON, Jan 3 – U.S. job openings fell to nearly a three-year low in November, indicating a cooling labor market that could prompt the Federal Reserve to cut interest rates this year.
According to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report, job openings decreased by 62,000 to 8.790 million, the lowest level since March 2021. This decline in job openings suggests a potential slowdown in labor demand.
Despite the decrease in job openings, the labor market remains relatively strong. Layoffs were at their lowest level since December 2022, and there were 1.4 job openings for every unemployed person. Additionally, the quits rate, which is seen as a measure of labor market confidence, fell to 2.2%, potentially contributing to slower wage growth and lower inflation.
However, the manufacturing sector continues to face challenges. The Institute for Supply Management (ISM) reported that its manufacturing PMI increased to 47.4 in December, indicating the 14th consecutive month of contraction in the industry. While production at factories rebounded, subdued demand and falling prices remain a concern.
Financial markets are anticipating rate cuts by the Federal Reserve as early as March, with economists suggesting that the central bank is preparing for an upcoming reduction in rates.
The Fed is likely in a sweet spot as they prepare markets for an upcoming cut in rates, said Jeffrey Roach, chief economist at LPL Financial.
The attention now turns to the release of the December employment report by the Labor Department on Friday. Economists predict that nonfarm payrolls increased by 170,000 jobs in December, slightly below the average monthly rise of the past year.
In conclusion, the U.S. job market is experiencing a slowdown, with job openings near a three-year low and manufacturing remaining weak. The Federal Reserve may respond by cutting interest rates to stimulate the economy, while the upcoming employment report will provide further insights into the health of the labor market.
(This article was written by a Reuters journalist and edited by Andrea Ricci and Paul Simao)
