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US job openings fell to their lowest level in more than two years in October, another sign of a cooling labour market that sparked a rally in government debt as traders bet on less aggressive monetary policy from the Federal Reserve.
The job-openings data offers more evidence that the US central bank’s efforts to damp demand with high interest rates is working — although officials insist cuts to rates are not on the cards in the near term.
US businesses advertised 8.7mn job vacancies in October, down from 9.6mn in September, according to the labour department’s Job Openings and Labor Turnover Survey released on Tuesday. It is the lowest level of openings since March 2021.
Economists surveyed by LSEG, who consider job openings to be a proxy for labour demand, had been expecting 9.3mn openings.
Demand for labour surged during the recovery from the coronavirus pandemic, pushing up wage growth, but job openings have largely trended downwards since 2022. October’s drop was driven by fewer openings in the healthcare, financial activities and retail sectors.
While job opening figures can be volatile, lay-offs held steady at 1.6mn and the number of workers quitting remained unchanged at 3.6mn — another indicator of softening in the labour market.
Nick Bunker, an economist at the jobs site Indeed, said the sharp drop in job openings combined with steady hiring show that the labour market was “rebalancing” to pre-pandemic levels.
“After years of excitement, the US labour market is ready for some boring times,” he said.
Treasury yields fell before the jobs report, after a top European Central Bank official said that further rate rises in the eurozone were “rather unlikely”. The resulting rally in US bonds was preserved after the job openings figures and through Tuesday’s session, with the benchmark 10-year yield down 0.11 percentage points at 4.18 per cent in late-afternoon trading in New York.
The Nasdaq Composite closed 0.3 per cent higher while the S&P 500 dropped 0.1 per cent.
The latest sign that demand across the US labour market is softening will be welcomed at the Fed, which is debating how much more to squeeze the economy to get inflation under control. Officials will also be watching closely on Friday when the latest monthly payrolls data is published.
The US central bank is set to keep the federal funds rate steady at a 22-year high of 5.25 per cent to 5.5 per cent when it meets later this month — a level that has been in place since July.
Before the Fed considers new cuts it will need to be confident that inflation is moving back to its longstanding 2 per cent target, a conclusion that will entail evidence that consumer price growth is moderating. Further signs of labour market cooling will also be necessary.
Jay Powell, the Fed chair, said last week that the central bank’s plan would be to “let the data reveal the appropriate path”.