The U.S. labor market sent contradictory signals in October as job openings climbed unexpectedly while hiring slowed to its weakest pace in years, according to the Bureau of Labor Statistics’ (BLS) latest Job Openings and Labor Turnover Survey (JOLTS).
Job openings rose to 7.74 million in October, surpassing the 7.51 million forecast by economists and marking an increase from September’s revised figure of 7.37 million. This pushed the openings rate to 4.6%, up from 4.4% the previous month. However, hiring plummeted to 5.31 million, a drop of 269,000 from September, with the hiring rate falling to 3.3%, its lowest level in recent memory.
Labor Market Resilience Amid Headwinds
Economists were surprised by the rise in openings, signaling continued demand for workers despite a series of challenges, including labor strikes and weather-related disruptions. “Today’s report is yet another indication that labor demand is softening but not collapsing,” said Eugenio Aleman, chief economist at Raymond James.
Quits, a key measure of worker confidence, surged to 3.3 million, the highest since May 2023. The quits rate rose to 2.1% from 1.9%, reflecting growing optimism among workers about job prospects. Matthew Martin, senior economist at Oxford Economics, highlighted the significance of this increase: “The quits rate rose for the first time since May, signaling a greater willingness for workers to leave their positions.”
Meanwhile, layoffs fell to 1.63 million, a decline of 169,000 from the previous month, with the layoffs rate remaining stable at 1.0%. Employers appear to be holding onto workers despite the hiring slowdown.
Implications for the Federal Reserve
The mixed data come at a crucial time for the Federal Reserve, which closely monitors the JOLTS report to gauge labor market conditions. Markets are currently pricing in a 75% probability of a quarter-point interest rate cut at the Fed’s upcoming December 18 meeting.
October’s conflicting signals complicate the central bank’s decision-making. While rising job openings suggest persistent demand, the slowdown in hiring and low payroll growth signal emerging slack.
A Precursor to November’s Jobs Report
Economists now turn their attention to the November jobs report, due Friday, which is expected to show a rebound in employment growth. Projections indicate nonfarm payrolls increased by 220,000 in November, a sharp contrast to October’s dismal gain of 12,000 jobs, the lowest since December 2020.
As the labor market grapples with these contradictions, October’s report underscores the challenges of interpreting the current economic landscape. The U.S. job market remains a puzzle, balancing resilience with signs of growing fragility.
