Job openings in the United States hit their lowest point in more than two years, adding further evidence to the narrative of a cooling labour market.

The data, released on Tuesday by the Labour Department’s Job Openings and Labour Turnover Survey, contributed to a surge in government debt trading as investors speculated on a less aggressive monetary policy from the Federal Reserve.

According to the report, US businesses advertised 8.7 million job vacancies in October, marking a notable decline from the 9.6 million reported in September.

This figure represents the lowest level of job openings since March 2021 and caught economists surveyed by LSEG off guard, as they had anticipated 9.3 million job openings.

The decline in job openings is seen as a reflection of the Federal Reserve’s efforts to cool demand through higher interest rates. Despite the downturn in job opportunities, officials from the central bank emphasise that rate cuts are not currently under consideration in the near term.

A downward trend

The surge in labour demand observed during the post-pandemic recovery had led to increased wage growth. However, since 2022, job openings have been on a downward trend. The October drop was particularly driven by reduced openings in the healthcare, financial activities, and retail sectors.

While job opening figures can be volatile, the report also highlighted that layoffs remained steady at 1.6 million, and the number of workers quitting held unchanged at 3.6 million. These factors serve as additional indicators of softening in the labour market.

Nick Bunker, an economist at the job site Indeed, suggested that the sharp decline in job openings, coupled with steady hiring, indicates a “rebalancing” of the labour market to pre-pandemic levels. He remarked, “After years of excitement, the US labour market is ready for some boring times.”

In response to the news, Treasury yields fell, spurred further by comments from a top European Central Bank official hinting at the unlikelihood of further rate rises in the eurozone. The resulting rally in US bonds continued through Tuesday’s session, with the benchmark 10-year yield down 0.11 percentage points at 4.18 percent in late-afternoon trading in New York.

Mixed reactions

The Nasdaq Composite closed 0.3 percent higher, while the S&P 500 dropped 0.1 percent, reflecting the mixed reactions in the financial markets to the latest labour market data.

This development is likely to be of interest to the Federal Reserve, which is currently deliberating on the extent to which it should tighten economic measures to rein in inflation. The central bank is expected to maintain the federal funds rate at a 22-year high of 5.25 to 5.5 percent when it meets later this month, a level in place since July.

Before considering new cuts, the Fed will need to be confident that inflation is moving back toward its longstanding 2 percent target. This will require evidence of moderating consumer price growth, along with further signs of cooling in the labour market.

Fed Chair Jay Powell emphasised last week that the central bank’s plan is to “let the data reveal the appropriate path,” underscoring the importance of ongoing economic indicators in shaping future policy decisions.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.