The number of job openings in the US exceeded expectations for Nov., and the estimate for the prior month underwent a significant upward revision, highlighting the continued tightness in the labor market, which is likely to increase inflation concerns and encourage the Federal Reserve to keep raising interest rates.
At the end of November, there were 10.5 million available jobs, exceeding even the greatest projections. The average prediction was for 10.1 million.
The number for the end of October was changed from 10.334 million to 10.512 million, showing that the labor market was tighter than initially believed and that the fall in job vacancies at the end of last year was not as severe as it appeared.
The Job Openings and Labor Turnover Survey, or JOLTS, of the Labor Department provides the data.
The number of job openings is regularly monitored by the Federal Reserve as an indicator of the labor market’s demand. According to Fed Chairman Jerome Powell, the Fed must lower labor demand in order to lower inflation. The concern is that rising labor demand will drive up wages, which would drive up prices. Workers can then seek even higher pay as a response to rising costs, a scenario known as a “wage-price spiral.”
Fed policymakers are concerned that inflation will get entrenched in the economy if workers start to anticipate that high levels of inflation would remain. Inflation expectations, according to central bankers, are still firmly anchored, but if the Fed does not curb inflation soon, this may change.
The ratio of unemployed people to open positions is one important indicator of the strength of the labor market that Fed officials study. These are usually evenly matched. At the time of the epidemic, there were 1.2 jobs for every unemployed person, which was viewed as high and indicative of a tight labor market.
The ratio has been badly out of balance for more than a year due to decreasing unemployment rates and unusually high levels of open positions. According to the JOLTS report released on Wednesday, the ratio stayed at 1.7 to 1 in December, which is still far lower than the two-to-one ratio witnessed last year but is still an unparalleled ratio before the epidemic.
In November, there were 4.2 million more people departing their positions than in October, and the percentage of workers quitting their jobs increased from 2.6 to 2.7 percent. Workers frequently willingly leave jobs when they anticipate being able to earn more money or find employment elsewhere, therefore quits are seen as another indicator of how tight the labor market is.
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