January Job Openings Remain Strong Despite Minor Dip

Refinitiv predicted a net increase of 205,000 jobs in February with an unemployment rate of 3.4%, as anticipated by economists.[0] Economists on Wall Street predict that the employment report for February will display an addition of 220,000 jobs.[1] Despite the 517,000 jobs added in January, even if there were to be a significant decrease of 100,000 new jobs, the total jobs added in the first two months of the year would still exceed 300,000; a number that is far too great for the Federal Reserve.[1]

In January, job openings decreased to 10.8 million, which is a decline from the revised 11.2 million openings in the previous month. Job openings in the construction, leisure and hospitality and finance sectors saw the biggest decreases.[2]

The Bureau of Labor Statistics reported that job openings decreased to 10.8 million on the last business day of January. During the course of the month, the number of hires and total separations remained relatively unchanged, with 6.4 million and 5.9 million respectively.[3] Quits decreased by 3.9 million, whereas layoffs and discharges rose by 1.7 million in separations.[3]

The report released on Friday is just a little over a week away from the Federal Reserve's upcoming policy meeting. Investors are expecting a higher 0.50% rate hike, as Fed Chair Jay Powell recently informed legislators that “the ultimate level of interest rates is likely to be higher than previously anticipated.”[0]

Nonfarm payrolls are forecast to clock in at 205,000, following January's 517,000 increase, with the unemployment rate seen steady at 3.4% and average hourly earnings picking up to 4.8% year-on-year vs. 4.4% in January.[4]

BLS data indicates that the 1.72 million job losses in January represent a stark change from the average of 1.44 million monthly layoffs recorded over the past two years, which never exceeded 1.63 million.[5]

The JOLTS report revealed that 6.37 million workers were hired in the month, the highest number since August, indicating a high pace of hiring.[6]

Monetary policy formulation by Federal Reserve officials involves close scrutiny of the JOLTS report.[6] This week, Fed Chairman Jerome Powell made a statement on Capitol Hill in which he declared the labor market to be “extremely tight” and warned that the recent surge in inflation data could lead to a greater than anticipated increase in interest rates.[6]

In January, the number of job openings only slightly decreased, indicating the economy is still robust.[7]

0. “Jobs report: US expected to add 225,000 new jobs in February” Yahoo News, 10 Mar. 2023, https://news.yahoo.com/february-jobs-report-march-10-2023-124602371.html

1. “Why Friday's Jobs Report Won't Save The S&P 500 From Fed Hawks” Investor's Business Daily, 9 Mar. 2023, https://www.investors.com/news/economy/why-a-soft-jobs-report-wont-save-the-sp-500-from-fed-hawks/

2. “U.S. job openings dipped in January” Axios, 9 Mar. 2023, https://www.axios.com/2023/03/08/january-job-report-openings-layoffs

3. “Job Openings and Labor Turnover – January 2023” Forex Factory, 8 Mar. 2023, https://www.forexfactory.com/news/1209582-job-openings-and-labor-turnover-january-2023

4. “S&P 500 Outlook: All Eyes on US Jobs Data, Good News May Be Bad News for Stocks” DailyFX, 9 Mar. 2023, https://www.dailyfx.com/news/spx-sp-500-outlook-all-eyes-on-us-jobs-data-good-news-may-be-bad-news-for-stocks-20230309.html

5. “The number of available jobs in the US shrank in January” CNN, 8 Mar. 2023, https://www.cnn.com/2023/03/08/economy/job-openings-layoffs-jolts-january/index.html

6. “Job openings declined in January but still far outnumber available workers” CNBC, 8 Mar. 2023, https://www.cnbc.com/2023/03/08/job-openings-declined-in-january-but-still-far-outnumber-available-workers.html

7. “‘Shocking' plunge in construction job openings as Fed rate hikes begin to sting” Washington Examiner, 8 Mar. 2023, https://www.washingtonexaminer.com/policy/economy/construction-job-openings-fall-interest-rates

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