U.S. Labor Market Remains Hot Despite Drop in Job Openings

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U.S.: labor market remains overheated

U.S. job openings fell by 410,000 in January, but the 2022 data was revised upward to 11.23 million, bringing the total to 10.82 million openings in January. That’s 1.9 times the number of unemployed, up 1.96 times in December after the revision. In the private sector, 9.77 million job openings remain. But still there are hints of the market cooling, for the first time in many months less than 4 million Americans have changed jobs in search of a better life (wage), and the employer-initiated layoffs are more common. True, more Americans are hiring than firing – not much has changed.

The ADP counted a job gain of 240,000 in February, with small businesses cutting and medium and large businesses hiring. Considering the past reports, the ADP data should be treated rather cautiously, they used to count crookedly, after the change of methodology something may improve, but it is too early to say. That said, they now have data on wage changes: growth slowed down a bit but from 7.3% y/y to 7.2% y/y, and with job changes you can expect a gain of 14.3% y/y (was 14.9% y/y). This is still very aggressive and so far the job market remains extremely overheated. Weekly jobless claims <200k and a total of <2 million on benefits is telling.

See also  Weekly Global Economic Digest (WED) on 13.08.2023

The head of FRS J. Powell on Wednesday did not bring much joy to the markets, though he tried to smooth the signal a little bit by saying that they have not made a decision yet (25 or 50) and will look at the data… but so far the data is more in favor of a harder reaction… although the labor market report and inflation reports are still to come – they will be decisive. That said, the Fed, based on the data, continues to show that it just doesn’t know where the ceiling will be and is even technically almost guaranteed to overreact.

In Congress, the head of the Fed was very nervous this time with questions like “You’re trying to put people out of work… That’s your job, isn’t it?”… “you want to put 2 million Americans out of work,” etc. Powell, of course, fought back that they were trying to restore price stability… telling them that this time things might be “different”… I recall how “different” it already was when inflation was “temporary”). Unemployment is not yet rising, elections are a year and a half away, and the Fed has already begun to actively “press” politicians… It’s going to get worse…

See also  Weekly Global Economic Digest (WED) on 26.08.2023


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