Job openings rise again in December, adding to pressure on the Fed
REAL ECONOMY BLOG | February 01, 2023
Authored by RSM US LLP
Labor demand surged again in December after two consecutive drops, according to government data released on Wednesday hours ahead of the Federal Reserve’s rate decision.
The number of job vacancies jumped to 11 million in December from 10.4 million, mostly driven by seasonal-related categories like leisure and hospitality, trade and transportation, Bureau of Labor Statistics data show.
Technology job demand showed no surprise, falling by half amid an increasing number of layoffs in recent months.
There were 1.9 job openings available per unemployed worker on the month, up from 1.7 in November, the highest since July.
While most market participants have been expecting a labor market slowdown, today’s number on labor demand proves that it might take a while more for the imbalance between labor demand and supply to fade.
The data most likely will not change the Fed’s expected 25 basis-point hike but will certainly make its way into Chairman Jerome Powell’s speech in the afternoon.
The Fed has been clear from the beginning that it is determined to cool the high demand for labor, which puts upward pressure on wages and, in turn, inflation. Wednesday’s job openings data did little to assuage that concern, adding to our case of more rate hikes to come.
Hirings defied widespread announcements of hiring freezes, picking up on the month to 6.2 million from 6 million earlier. Most of the gains came from trade, transportation, education and health services.
The quit rate stayed unchanged at 2.7%, mostly from small companies that have fewer than 50 employees.
Overall, the data suggests that while layoffs and hiring freezes from big firms are making headlines, medium and small -size companies are still struggling with hiring either because of the persistent labor shortages or high turnover rates.
And those struggles are a timely reminder that any speculation of a rate cut based on headlines about layoffs is premature.
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This article was written by Tuan Nguyen and originally appeared on 2023-02-01.
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