US labor market shows no signs of deterioration as job openings rebound
WASHINGTON, Oct 1 (Reuters) – U.S. job openings unexpectedly rose in August after two monthly declines, but hiring was consistent with a softer and slower labor market that put the Federal Reserve on track to cut interest rates again in November.
The Labor Department's Job Openings and Labor Turnover Survey, or JOLTS, report on Tuesday also showed a drop in layoff rates. There were 1.13 job openings per unemployed person in August compared to 1.08 in July.
Resignations were the lowest in four years, a sign that Americans are becoming less confident in the job market.
Although Fed Chair Jerome Powell on Monday pushed for another half-percentage-point rate cut, contrary to investor expectations, he described labor market conditions as clearly cooling over the past year, noting that “workers now see jobs as somewhat less available than they were in 2019.” in.”
“Today's JOLTS estimates will be regarded as encouraging evidence that labor demand is stabilizing, suggesting that further increases in the unemployment rate may be limited,” said Jonathan Miller, a senior economist at Barclays. “The widening gap between hiring and layoffs likely positions the Fed to cut 25 basis points in November.”
Job openings, a measure of labor demand, rose by 329,000 to 8.040 million in the last day of August, the Labor Department's Bureau of Labor Statistics said. July data was revised higher to show 7.711 million open positions instead of the previously reported 7.673 million.
Economists polled by Reuters had forecast 7.660 million job openings. The increase in vacancies was led by the construction industry, with 138,000 job openings. There were 78,000 unfilled posts in state and local government excluding education. But job openings in the 'other services' category fell by 93,000.
The job opening rate rose to 4.8% from 4.6% in July. Businesses with 10 to 49 employees reported another 203,000 job openings. Mid-sized and large companies have reduced vacancies.
Rents fell by 99,000 to 5.317 million, driven by declines in retail trade, transportation, warehousing and utilities as well as manufacturing, health care and social assistance. Hotel, restaurant and bar fares have also come down.
The hiring rate fell to 3.3% from 3.4% in July. The number of hires fell by 180,000 among companies with 10 to 49 employees, suggesting that staff shortages may be a problem.
Layoffs fell by 105,000 to 1.608 million. Layoffs decreased in the retail trade and healthcare and social assistance sectors, as well as hotels, restaurants and bars. Layoffs, however, increased in the professional and business services industries. Small, medium-sized and large employers all reported a decrease in layoffs.
The rate of resignations fell by 159,000 to 3.084 million, the lowest level since August 2020. That pushed it to a four-year low of 1.9% from 2.0% in July, which should help curb wage inflation.
The slowdown in the labor market is being driven by cool hiring following a 525 basis point rate hike from the US central bank in 2022 and 2023 to combat inflation. Price pressures have eased considerably, allowing the Fed to shift focus to the labor market.
The dollar rose against a basket of currencies as investors sought a safe haven from rising tensions in the Middle East. US Treasury yields fall on safe-haven flows.
Manufacturing is stable
The central bank last month cut its benchmark interest rate by an unusually large 50 basis points to a range of 4.75%-5.00%, the first reduction in borrowing costs since 2020, a nod to growing concerns over the health of the labor market.
The Fed is expected to cut interest rates again in November and December. The September employment report, due on Friday, is expected to show non-farm payrolls rose by 140,000 jobs last month, up from 142,000 in August, according to a Reuters poll. That would be below the average monthly gain of 202,000 jobs over the past 12 months.
The unemployment rate is forecast to remain unchanged at 4.2%. It rose from 3.4% in April 2023 as labor supply increased due to increased immigration.
Overall production remained at weak levels, although new orders improved. ISM's manufacturing PMI was unchanged at 47.2 last month. A PMI reading below 50 indicates a contraction in the manufacturing sector, which accounts for 10.3% of the economy.
“The strike will have a significant impact on U.S. manufacturing if it lasts long enough, but the early-day impact will be muted as it seemed almost certain since longshoremen walked away from the bargaining table in June and companies stockpiled parts and materials in anticipation,” FHN Financial said. Economic analyst Mark Strieber said
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Reporting by Lucia Muticani; Editing by Paul Simao and Andrea Ricci
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