U.S. companies announced 8.7 million new job offers in October, compared to 9.6 million in September, according to a Labor Department survey of job openings and employee turnover released Tuesday. this Lowest opening since March 2021 – writes the Financial Times.
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Economists expected 9.3 million job vacancies, much worse than expected. This is an important indicator that shows the demand for labor in the economy.
Demand for labor rose during the recovery period from the coronavirus pandemic, which consequently led to higher wages, but the number of job offers has been largely on a downward trend since 2022. The decline in October was due to… Fewer job openings in the healthcare, financial and retail sectors.
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The number of layoffs remained stable at 1.6 million, and the number of workers who left their jobs remained at 3.6 million.
The sharp decline in new job openings coupled with flat hiring means the labor market is “rebalancing” to pre-pandemic levels, says Nick Bunker, an economist at the job site Indeed. – After years of excitement, the American labor market is ready for boring times, he told the Financial Times.
US bonds are rising
US Treasury yields fell ahead of the jobs report, after a senior European Central Bank official said further interest rate hikes in the euro zone were “somewhat unlikely.” resulting from this US bond prices rise (The yield advantage on eurozone bonds will remain) It is kept after vacancy data. In other words, the plans of the European Central Bank and the competition between US and European bonds turned out to be more important for the US market than a possible decline in federal interest rates after negative changes in the labor market.
See also: Federal Reserve official: “The central bank has not yet talked about interest rate cuts.”
On Wednesday, the yield on US 10-year securities fell to 3.92%. A month ago, the rate was 4.25%. Demand for bonds has translated into demand for the dollar itself. As a result, it is gaining strength against the euro.
Demand for bonds leads to a decline in interest in US stocks. The S&P 500 fell 0.5% on Wednesday, and the Nasdaq index of technology stocks fell 0.9%.
What's next for federal funds rates?
The latest signs of weak demand in the US labor market are likely to be welcomed by the Federal Reserve as it discusses how long the economy will bear the burden of controlling inflation. Next Friday's monthly employment data will be closely watched.
The US central bank, at its meeting at the end of the month, is expected to keep the federal funds rate stable, but at the highest level in 22 years, at 5.25-5.5%. This level has been in effect since July. The Chicago futures market expects with 76.3% certainty a cut of at least 0.25 percentage points. It will arrive on March 20.
Before the Fed considers cuts, it needs to ensure that inflation returns to its long-term target of 2 percent, which could be evidence that consumer price growth is moderating. It will also be necessary for other signs of a slowdown in the labor market to appear.
Fed Chairman Jay Powell said last week that the central bank's plan would be to “let data lead the way.”
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