- The number of vacancies falls by 410,000 to 10.8 million in January
- Fewer workers voluntarily quit their jobs
- Redundancies increased, and were higher than first thought in 2022
WASHINGTON, March 8 (Reuters) – U.S. job vacancies fell less than expected in January and last month’s data was revised higher, pointing to persistently tight labor market conditions that are likely to keep the Federal Reserve on track to raise interest rates longer.
But the Labor Ministry’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday also suggested that cracks are forming in the labor market. Redundancies increased in January and layoffs were higher than first thought in 2022. Fewer people voluntarily quit their jobs.
Nevertheless, the labor market is still strong, with 1.90 vacancies for every unemployed worker in January. Fed Chairman Jerome Powell told lawmakers on Tuesday that the U.S. central bank would likely have to raise interest rates more than expected, opening the door to a half-percentage-point increase this month to fight inflation after a recent string of strong economic data.
“The decline in job vacancies does not indicate any meaningful improvement in the balance between labor demand and labor supply from the Fed’s perspective,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York.
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Job openings, a measure of labor demand, fell by 410,000 to 10.8 million on the last day of January. Data for December was revised higher to show 11.2 million job vacancies instead of the previously reported 11.0 million. Economists polled by Reuters had predicted 10.5 million vacancies.
The report also showed that vacancies were mostly higher than originally estimated in 2022, averaging 11.2 million, an increase of 1.2 million from 2021.
The decline in January, which was across all four regions, was led by construction, with 240,000 fewer vacancies. Unemployment fell by 204,000 in accommodation and catering, and fell by 100,000 in the finance and insurance industry.
Employment in the leisure and hospitality industry, which covers accommodation and food services, is still below pre-pandemic levels. This sector has been the biggest driver of job growth.
Job openings increased in transport, storage and tools as well as the production of non-durable goods.
The number of vacancies fell to a still high 6.5% from 6.8% in December. It averaged 6.8% in 2022, up from 6.4% in 2021.
Employment rose to 6.4 million from 6.3 million in December. The employment rate increased to 4.1% from December’s 4.0%. There were 77.2 million hires in 2022, a gain of 1.2 million from 2021. The hiring rate averaged 4.2% in December, down from 4.3% in 2021.
Redundancies increased by 241,000 to 1.7 million, concentrated in professional and business services. However, layoffs decreased in the federal government. They increased by 461,000 in 2022 to 17.6 million. Nevertheless, they remain low by historical standards.
About 3.9 million people quit their jobs, down 207,000 from December. The decline was mostly in professional and business services, educational services and the federal government. A record 50.6 million people quit in 2022.
“Last year’s labor market may not have been as beneficial for workers as we thought, as layoffs were revised down and layoffs were revised up,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “But by any standard, both measures showed a tight, hot labor market.”
US stocks were mixed. The dollar was little changed against a basket of currencies. Prices of US government bonds rose.
PRIVATE WAGES ARE INCREASING
The strength of the labor market was reinforced by the ADP National Employment report, which showed that private employment increased by 242,000 jobs in February after increasing by 119,000 in January. Economists had predicted that private employment rose by 200,000.
Job growth was robust in January, with the unemployment rate falling to a more than 53-1/2-year low of 3.4%. Consumer spending picked up sharply and inflation picked up in January.
The ADP report showed that hiring continues to be concentrated in the services sector, which added 190,000 jobs last month, most of them in the leisure and hospitality industries.
There were also gains in finance, education and health services, information and trade, transport and utilities. But professional and business services are losing 36,000 jobs. The goods-producing sector added 52,000 jobs, with manufacturing creating 43,000 positions. But construction wages fell by 16,000 jobs.
According to a Reuters poll of economists, non-farm payrolls are projected to have increased by 205,000 jobs last month after a gain of 517,000 in January.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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