Job Market Remains Tight Despite January Decline in Job Openings
The number of job openings in the United States declined to 10.8 million in January, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Summary (JOLTS) released on Wednesday.[0] Hires and separations from payrolls remained relatively unchanged at 6.4 million and 5.9 million, respectively.[1] Within separations, quits dropped to 3.9 million from 4.09 million, while layoffs and discharges increased to 1.72 million from 1.48 million.[2]
This employment report has implications for the Federal Reserve's interest rate policy, as the central bank seeks to cool the labor market and combat inflation. While the JOLTS report shows job openings are heading in the right direction, the decline is far too modest to convince the Fed that labor market conditions are cooling enough to bring down inflation.[3] This means the Fed is likely to keep raising interest rates at a quarter-point pace in the coming months.
The construction industry was particularly hard hit in the January JOLTS report, with job openings plunging by nearly 50% to 248,000 from 488,000 in December. The decrease reflects the retrenchment in the single-family homebuilding sector.
The number of Americans quitting their jobs fell slightly to 3.9 million, or roughly 2.5% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.[4]
The current job market is still tight, with the imbalance between worker supply and demand meaning there are still nearly two job openings for every unemployed American.[5] The job market is not likely to cool down anytime soon, as the payroll provider ADP reported that a projected 242,000 jobs were added by private employers in February.
It remains to be seen how the February jobs report will influence the Federal Reserve's interest rate policy. Markets are currently expecting the Fed to raise interest rates by another 0.25% later this month, but a hotter-than-expected jobs report could increase the chances the Fed will ramp back up to a 0.5% rate hike.
0. “‘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
1. “U.S. Job Openings Declined, But Not Enough To Stop The Fed From Hiking Rates And Causing More Job Losses” Forbes, 8 Mar. 2023, https://www.forbes.com/sites/jackkelly/2023/03/08/us-job-openings-declined-but-not-enough-to-stop-the-fed-from-hiking-rates-and-causing-more-job-losses/
2. “Job openings in January fall to 10.8 million, still high, as layoffs rise” Straight Arrow News, 8 Mar. 2023, https://straightarrownews.com/cc/job-openings-in-january-fall-to-10-8-million-still-high-as-layoffs-rise/
3. “Markets Brief: What to Watch in the February Jobs Report” Morningstar, 3 Mar. 2023, https://www.morningstar.com/articles/1142099/markets-brief-what-to-watch-in-the-february-jobs-report
4. “Job openings dipped in January but remain historically high” Fox Business, 8 Mar. 2023, https://www.foxbusiness.com/economy/job-openings-dipped-january-remain-historically-high
5. “The number of available jobs in the US shrank in January” erienewsnow.com, 8 Mar. 2023, https://www.erienewsnow.com/story/48514834/the-number-of-available-jobs-in-the-us-shrank-in-january
