More job openings and turnover happening

More jobs opened up in the US at the end of October: 7.7 million job openings in total; that's 300,000 more than September but one million fewer compared to January. The numbers come from government sources.

More timely private data from Indeed Hiring Lab show that job postings declined in October but grew again in November.?The upticks in both the national Job Openings and Labor Turnover Survey (JOLTS) and Indeed data point to stabilization in the labor market.

Looking at specific sectors, job openings increased month-over-month in professional and business services (+209,000) and information (+87,000), signaling increased demand for white-collar workers. A gain of 162,000 openings in accommodation and food services reversed the cooling we had seen since March.

At the national level, government shed 26,000 job openings at the end of October. Risks there are to the downside in the near future. State and local government job openings, excluding education, posted gains in October that reversed the previous month's losses. Openings remain well above the pre-pandemic baseline despite new fiscal tightening.

A key measure for the Federal Reserve, the ratio of job openings to unemployed job seekers, was flat at 1.1 for the fourth month in a row. That shows a more stable labor market.

We did spot a warning sign in that the hiring rate declined to 3.3% from 3.5% the month before. In 2013, a 3.3% hiring rate coincided with an unemployment rate above 7%. In recent months, the unemployment rate has stabilized after rising in the beginning of the year. If hiring does not increase, that could lead to a rise in unemployment even in the absence of widespread layoffs.

The low hiring has so far been offset by low layoffs. The layoffs rate ticked down to 1% at the end of October from 1.1% the month before. Layoffs fell by 73,000 in construction month-over-month to the lowest level ever. This could indicate labor hoarding in advance of potential crackdowns on immigration. There is strong demand for rebuilding after hurricanes as well as for new data centers, manufacturing plants and housing if mortgage rates fall.

The rise in the quits rate demonstrated resiliency; it increased to 2.1% from 1.9% the month before. Quits rose month-over-month in professional and business services (+37,000) and information (+6,000), suggesting a rebound for some white-collar jobs.

The premium for switching jobs dropped to 6.2% in October, according to ADP. Back in March, it was 8.3%. Despite the lower premium now, more workers voluntarily quit their jobs in October. A proxy for worker bargaining power, called the Labor Leverage Ratio, jumped to its highest level since June.

We expect this Friday's employment report to show strong gains.

Bottom Line

The October JOLTS showed a largely resilient and stable labor market. Job openings and quits rose while layoffs ticked down. One caveat was the decline in the hiring rate. We expect this Friday's employment report to show strong gains. Along with stickier inflation data, a December rate cut by the Fed is a toss-up.