- Job postings fall by 353,000 to 10.3 million in October
- Third-quarter GDP growth revised to 2.9% from 2.6%
- Consumer, business and export spending matters for upgrading
- Goods trade deficit widens 7.7% in October
WASHINGTON, Nov 30 (Reuters) – U.S. job vacancies fell in October but remained significantly elevated, indicating continued resilience in the labor market despite the Federal Reserve’s efforts to cool demand by aggressively expanding interest rates.
The tight labor market keeps the Fed on track to continue tightening monetary policy, increasing the risks of a recession next year. Most economists, however, think any downturn is likely to be short and moderate due to the unprecedented strength in the job market.
Fed Chairman Jerome Powell said on Wednesday that the US central bank could reduce the pace of its rate hikes “as early as December”, but warned that the fight against inflation was far from over.
“High job vacancies during an economic downturn means the labor market may remain tight for some time,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “Companies could hoard workers even if the economy goes through a recession.”
Job postings, a measure of labor demand, fell by 353,000 to 10.3 million on the last day of October, the Labor Department said in its monthly job postings survey. employment and staff turnover, or JOLTS report. It was the 16th month in a row that job postings remained above 10 million.
October job postings were in line with economists’ expectations. There were 1.7 job openings for every unemployed person in October, down from 1.9 in September. The drop in job openings last month was led by state and local governments, excluding education, where vacancies fell by 101,000.
There were 95,000 fewer job openings in non-durable goods manufacturing, while vacancies in the federal government fell by 61,000. But there were 76,000 more vacancies in other services and vacancies increased by 70,000 in the finance and insurance sector.
The job creation rate fell to 6.3% from 6.5% in September. Hiring slipped to 6.0 million from 6.1 million in September.
The Fed’s Beige Book revealed on Wednesday that while difficulties in hiring and retaining workers continued to ease, “labour markets were still described as tight.”
Growing recession fears seem to have dampened the big quit move. About 4.0 million people left their jobs, compared to 4.1 million in September.
The quit rate, seen by policymakers and economists as a measure of confidence in the job market, fell to 2.6% from 2.7% the previous month. Layoffs rose to a still-low 1.4 million from 1.3 million, leaving the layoff rate unchanged at 0.9%.
“The data suggests very little labor market easing so far,” said Isfar Munir, an economist at Citigroup in New York. “It will be difficult for the Fed to be anything other than hawkish at this time.”
The U.S. central bank has raised its benchmark rate by 375 basis points this year, from near zero to a range of 3.75% to 4.00% in what has become the fastest rate hike cycle since. the 1980s. Economists expect a half-percentage-point increase at the Dec. 13-14 meeting.
US stocks rallied on Powell’s comments. The dollar fell against a basket of currencies. US Treasury prices rose.
The high level of job vacancies also suggests that labor shortages persist, which economists say is contributing to slower job growth. Private employment rose by 127,000 jobs in November, the smallest gain since January 2021, the ADP’s National Employment Report showed on Wednesday.
The strength of the labor market is helping to stimulate consumer spending, supporting the economy as a whole. A fourth Commerce Department report showed the economy rebounded stronger than initially thought in the third quarter.
Gross domestic product grew at an annualized rate of 2.9%, the government said in its second estimate of third-quarter GDP. That was revised up from the 2.6% pace reported last month. The economy had contracted at a rate of 0.6% in the second quarter.
The upward revision reflected upgrades to growth in consumer and business spending as well as exports, which offset the slowdown from a slower pace of inventory accumulation. But residential investment contracted for the sixth consecutive quarter, the longest such period since the housing market crashed in 2006.
Measured on the income side, the economy grew at a rate of 0.3%. Gross domestic income (GDI) contracted at a rate of 0.8% in the second quarter. In principle, GDP and GDI should be equal, but diverge in practice because they are estimated using different and largely independent data sources.
The income side of the growth ledger was driven by wages.
Average GDP and GDI, also known as gross domestic production and considered a better measure of economic activity, rose at a rate of 1.6% in the July-September period after declining at a rate of 0.7% in the second quarter.
Profits from current production fell $31.6 billion in the third quarter after rising $131.6 billion in the second quarter. Earnings were hit, however, by sanctions and fines imposed on some companies by federal and state agencies.
A fifth Commerce Department report showed the merchandise trade deficit jumped 7.7% to $99.0 billion last month as exports fell. The sharp widening of the deficit in October suggests that trade could weigh on GDP in the fourth quarter.
The Commerce Department also reported that wholesale inventories rose 0.8% in October after rising 0.6% in September. Retail inventories fell 0.2% after falling 0.1% in September. Motor vehicle inventories rose 0.4%.
Excluding motor vehicles, retailers’ inventories fell 0.4% after dropping 0.9% in September.
This component enters into the calculation of GDP. Inventories subtracted GDP growth in the third quarter.
Reporting by Lucia Mutikani; Editing by Nick Zieminski and Andrea Ricci
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