The jobs market finally shows some signs of cooling down with Fed’s consistent efforts of raising interest rates to tame inflation.
On Tuesday, April 4, the US Bureau of Labor Statistics (BLS) revealed that the number of job openings on the last business day of February 2023 was 9.9 million. This number dropped from the 10.5 million jobs in the previous month of January.
In its press release on Tuesday, BLS noted:
“Over the month, the number of hires and total separations changed little at 6.2 million and 5.8 million, respectively. Within separations, quits (4.0 million) edged up, while layoffs and discharges (1.5 million) decreased.”
This is for the first time in two years since May 2021 that the job opening numbers have tanked under 10 million. It shows that the Fed’s efforts to slow the labor market are showing some impact. In its quest to bring down inflation, the Fed has been targeting the red-hot labor market.
As the US inflation peaked at a four-decade high last October, the Fed has been aggressively hiking interest rates. Since March 2022, the US central bank raised the benchmark interest rates by nearly nine times. However, despite these measures, the jobs market continued to remain strong.
Just before the February data release, the job openings were outnumbering the available workers by 2:1. The data in February has brought it down to 1.7 to 1. Speaking to CNBC, Jeffrey Roach, chief economist at LPL Financial said:
“The labor market is starting to loosen as the number of job openings declined in most sectors. As the economy slows, firms will likely cut openings and workers will be less likely to quit in search of better hours and higher pay. The Fed could consider pausing rate hikes at the next meeting but only if the upcoming employment report shows signs of material weakness and the March [consumer price index] report reveals lower inflation.”
The Breakdown of the JOLTS Data
The Fed is watching the JOLTS data for any signs of labor slack. Along with the drop in job openings, there was a simultaneous drop in hires and separation.
Job openings in February for professional and business services saw a drop of 278,000. On the other hand, job openings in transportation and utilities decreased by 210,000. The only category that witnessed a noticeable jump was the construction sector with 129,000 new openings.
After the release of the JOLTS data, the US dollar Index declined toward the 101.70 level. Treasury Yields have started moving lowers as traders bet that the Fed would turn dovish from its previous rate hikes. On the other hand, Gold has rallied to more than $2,000. Lower Treasury Yields have also served as a catalyst pushing Gold above this psychologically important level.
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