There were more than half a million fewer US job openings on the final business day of October versus the prior month, the first of this week’s key labor market data showed.
The decline, which was far larger than economists expected, looked all the more pronounced given a downward revision to September’s headline JOLTS print.
At “just” 8.733 million, the total number of vacancies across the world’s largest economy was the lowest since March of 2021. Consensus expected 9.3 million from the headline. The actual print was below every estimate.
Hires were mostly unchanged. The gap narrowed to 2.85 million, the smallest since early 2021.
October’s figures suggest total vacancies fell by 2.5 million in the first 10 months of 2023. The unemployment rate rose 0.5% over the same period.
The data was a boon to the “immaculate disinflation” narrative and builds on last month’s run of softer data which emboldened rate cut bets for 2024.
Remember: This was always about vacancies.
I don’t want to overstate the case (or come across as unduly optimistic on soft landing odds), but those who suggested labor market normalization couldn’t be “outsourced” to the JOLTS headline were just plain wrong.
I’ll recycle some language from last month’s JOLTS coverage. America’s millions of potentially superfluous job openings were to labor market normalization what the Fed’s bloated RRP facility was to Treasury’s cash rebuild: Just as the market needed RRP balances to absorb bill issuance in order to avoid reserve drain, the economy needed job openings to “absorb” labor market normalization to avoid layoffs. So far, that’s worked out pretty well.
Quits were still elevated in October at 3.628 million, with the rate unchanged at 2.3.
Quits really need to come down a bit further. Elevated quits are evidence of “churn” and churn suggests workers are still confident in their capacity to find a new (and likely better-paying) position if they quit their current job. That’s inflationary on the margins.
Tuesday’s data showed layoffs loitered near record lows in data going back more than two decades.
All anyone will care about is the headline openings print and the extent to which it signaled the “immaculate disinflation” narrative is alive and, I dare say, well. The openings to unemployed ratio, which the Fed watches closely, dropped to 1.34, the lowest since August of 2021.