The number of job openings in the US is still high as the labor market remains tight

WASHINGTON, March 8 (Reuters) – US job vacancies fell less than expected in January and data for the previous month was revised upwards, pointing to continued tight labor market conditions likely to keep the Federal Reserve on track to to raise interest rates longer.

But the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday also pointed to some cracks in the labor market. The number of layoffs rose to the highest level in two years in January and the number of layoffs was higher than initially thought in 2022. Fewer people voluntarily left their jobs.

Nevertheless, the labor market remains strong, with 1.9 vacancies per unemployed person in January, up from 2.0 in December. Fed Chairman Jerome Powell told lawmakers on Tuesday that the U.S. central bank would likely have to raise rates more than expected and opened the door to a half-percentage point hike this month to fight inflation following a recent string of strong economic data.

“The decline in job openings does not indicate a significant improvement in the labor supply/demand balance from a Fed perspective,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York. “If you want to cling to straws, you might point to the second consecutive decline in the quit rate.”

Job vacancies, a measure of labor demand, fell by 410,000 to 10.8 million on the last day of January. The data for December was revised upwards to show 11.2 million job openings instead of the previously reported 11.0 million. Economists polled by Reuters had predicted 10.5 million job openings.

The report also showed that job openings in 2022 tended to be higher than initially estimated, with an average of 11.2 million, an increase of 1.2 million from 2021. The monthly drop in job vacancies occurred across all celebrate the regions, with major declines in the Midwest and West, the epicenter of technology job losses.

In construction, the biggest victim of the Fed’s aggressive monetary tightening campaign, job openings fell by a record 240,000.

There were 204,000 fewer vacancies in the hospitality industry and vacancies in the financial and insurance sectors fell by 100,000. Employment in the leisure and hospitality sector, which includes accommodation and food services, remains below pre-pandemic levels. This sector has been the biggest driver of job growth.

Vacancy rates also declined in durable goods manufacturing, retail, and state and local government. But job openings increased in transportation, storage and utilities, as well as non-durable goods manufacturing.

The vacancy rate fell from 6.8% in December to a still high 6.5%. It averaged 6.8% in 2022, up from 6.4% in 2021.

The number of new employees increased from 6.3 million in December to 6.4 million. The hiring rate increased from 4.0% in December to 4.1%. There were 77.2 million hires in 2022, a gain of 1.2 million compared to 2021. The hiring rate averaged 4.2% in December, up from 4.3% in 2021.

The number of layoffs increased by 241,000 to 1.7 million, the highest level since December 2020, concentrated in professional and business services. However, the number of layoffs in the federal government decreased. They increased sharply in the South, where employment has increased sharply.

The number of layoffs increased by 461,000 to 17.6 million in 2022. The number of layoffs rose from 1.0% in December to a still low 1.1%. While the rate remains below its pre-pandemic high of 1.3%, layoffs are now closer to the pre-COVID-19 public health crisis average of 1.9 million.

“That suggests that the period of unprecedented job security for American workers is coming to an end,” said Julia Pollak, chief economist at ZipRecruiter.

About 3.9 million people have quit their jobs. That was the lowest number since May 2021 and 207,000 less than in December. The decrease was mainly in professional and business services, education services and the federal government. A record 50.6 million people will retire in 2022.

LESS EMPLOYEES QUIT

Stocks on Wall Street were mixed. The dollar was stable against a basket of currencies. US Treasury bond prices rose.

Quitting rates, seen as a measure of job market confidence, fell to 2.5% from 2.6% in December, still above pre-pandemic norms of around 2.3%.

“The recent evolution of this measure, despite a decline this month, suggests that underlying wage pressures should remain elevated, even if pressures are easing somewhat,” said Marc Giannoni, chief US economist at Barclays in New York. “We continue to forecast that the pace of payroll employment growth will show a resilient labor market.”

The strength of the labor market was bolstered by the ADP National Employment Report, which showed that private employment increased by 242,000 jobs in February, following an increase of 119,000 in January.

Job growth was robust in January, with the unemployment rate falling to a more than 53-1/2 year low of 3.4%.

Nonfarm payrolls are forecast to rise by 205,000 jobs in February, following a rise of 517,000 in January, according to a survey of Reuters economists.

Data from Indeed showed that the number of job postings on the platform fell in February, suggesting there were 10.3 million job openings at the end of last month.

“That would be another drop of about 500,000 job openings,” said Nick Bunker, head of economic research at Indeed Hiring Lab. “Yet vacancies would still be 47% higher than before the pandemic. The labor market is cooling down, but it is still warm.”

Reporting by Lucia Mutikani; Edited by Chizu Nomiyama and Andrea Ricci

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