- Job openings rose by 572,000 to 11 million in December
- Manufacturing activities are further reduced in January
- Private payrolls rose 106,000 in January
WASHINGTON, Feb 1 (Reuters) – U.S. job openings unexpectedly rose in December, showing demand for labor strengthened despite rising interest rates and growing fears of a recession, which could keep the Federal Reserve on a policy-tightening path. , is still going strong.
The Labor Department’s monthly Survey of Job Openings and Job Turnover, or JOLTS, showed on Wednesday that 1.9 jobs were created for every unemployed person in December.
Signs of continued labor contraction did not stop the U.S. central bank from raising rates by 25 basis points at the end of a two-day meeting on Wednesday, further slowing the pace of rate hikes by the Federal Reserve. The Federal Reserve has promised a “steady increase” in borrowing costs.
“This could be the first recession in history without material job losses,” said Christopher Rapkey, chief economist at FWDBONDS in New York. It’s a good thing for the Fed that inflationary pressures are easing because the labor market isn’t cooling at all.
Job openings, a measure of labor demand, rose by 572,000 to 11.0 million on the last day of December. Economists polled by Reuters had forecast 10.25 million job openings.
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Some economists believed that the increase in December was temporary. Others speculate that job openings are overstated because of the difficulty in adjusting the data for seasonal fluctuations.
The leisure and hospitality sector accounted for three-quarters of the total increase, reaching its highest level since December 2021 – a month followed by a sharp decline in January 2022 – a pattern we expect to be evident in next month’s report. said Matthew Martin, an American economist at Oxford Economics in New York.
The increase in job openings in the retail sector also contrasted with the slower pace of seasonal hiring during the holidays.
There were another 409,000 unfilled jobs in the lodging and food service industries. Employment in this industry is lower than the pre-pandemic level. Retail trade reported another 134,000 vacancies. Construction, which has been hit by rising borrowing costs, had 82,000 more openings.
The job opening rate rose to 6.7 percent from 6.4 percent in November. Hiring increased to 6.2 million from 6.0 million in the previous month. The hiring rate rose to 4.0 percent from 3.9 percent in November. As hiring lags, wage growth could remain high, although it slowed in the fourth quarter.
Stocks fell on Wall Street. The dollar fell against a basket of currencies. US Treasury prices rose.
The Federal Reserve has raised interest rates by 450 basis points from near zero to a range of 4.50 and 4.75 percent since last March. The fastest cycle of monetary policy tightening since the 1980s has economists expecting a recession by the second half of the year. The housing market is stagnant and the recession in production is intensifying.
A separate report from the Institute for Supply Management (ISM) showed on Wednesday that its manufacturing PMI fell to 47.4 in January from 48.4 in December. The third consecutive monthly contraction pushed the index to its lowest level since May 2020 and below 48.7, consistent with a slowdown in the overall economy.
Only one of the six major manufacturing industries, transportation equipment, reported growth. Opinions from manufacturers were mixed, with some describing business as “still strong” while others said “sales are down.”
Despite the dire conditions, factories did not seem to be laying off workers in large numbers. According to the ISM report, companies “indicate that they do not plan to significantly reduce the number of employees as they are positive in the second half of the year.”
The JOLTS report showed layoffs rose to 1.5 million in December from 1.4 million in November. The layoff rate rose to 1.0 percent from 0.9 percent in the previous month. Workers also continued to walk off the job voluntarily in December. Quit rates, a measure of job market confidence, were unchanged at 2.7%.
A third report showed that private sector employment increased by 106,000 jobs last month after a gain of 253,000 jobs in December, well below economists’ expectations for an increase of 178,000 jobs. However, the ADP National Employment Report attributed the weaker-than-expected increase in private payrolls to bad weather in mid-January, including flooding in California.
Leisure/hospitality employment rose by 95,000 jobs last month, which economists said was hampered by bad weather.
The ADP report, produced jointly with Stanford’s Digital Economics Lab, was released on Friday ahead of the Labor Department’s more comprehensive and detailed employment report for January.
ADP has been an unreliable predictor of private payrolls in the Labor Department’s employment report. Nonfarm payrolls likely rose by 185,000 jobs in January after a 223,000 gain in December, according to a Reuters poll of economists.
Goldman Sachs economists said they did not expect a significant drop from the winter weather or the California floods in the January jobs report.
“We caution against extrapolation,” said Robila Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. Overall, the BLS data show that the economy continues to add jobs at a strong pace and that the labor market is showing only signs of gradual softening, despite the rapid rise in interest rates.
Reporting by Lucia Moticani; Edited by Chizo Nomiyama, Paul Simao, and Nick Ziminski
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