The United States witnessed an unexpected surge in job openings in December, an increase from November's 8.9 million, with the number of workers leaving their jobs fell to its lowest point in over three years, most likely due to a desire for better opportunities.
As per the Associated Press report, the employers posted around 9 million jobs in December, indicating that the labor market is likely to stay resilient for the US Federal Reserve to begin decreasing interest rates in the first quarter.
Financial markets have been expecting a first rate decrease as early as March, but persistent labour market momentum may make Fed members reluctant to act before the middle of the year.
Also Read: US job data: Hiring picks up with 216,000 new jobs being added
Why does the Fed expect to see the job market cool?
Despite dramatically increased interest rates, the US economy and job market have remained remarkably resilient, resulting in higher rates of borrowing for consumers and businesses. The Federal Reserve hiked its benchmark interest rate 11 times from March 2022 to July 2023, reaching a 23-year high of roughly 5.4%.
Ben Ayers, senior economist at Nationwide in Ohio, told Reuters: “Persistent demand for workers, while positive for continued economic growth, may throw a wrench into efforts to cool inflation early in 2024.”
{{/usCountry}}Ben Ayers, senior economist at Nationwide in Ohio, told Reuters: “Persistent demand for workers, while positive for continued economic growth, may throw a wrench into efforts to cool inflation early in 2024.”
{{/usCountry}}“This is again a sign of too much of a good thing, which should lead to a later-than-hoped shift to monetary policy easing,” the economist added.
The Fed expects to see the job market cool from its 2021 and 2022 red-hot levels, lowering pressure on US firms to increase salaries to attract and retain employees. While higher interest rates have hampered hiring, employment growth remains quite healthy.
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A look at US job cuts and unemployment rate
US employers opened 2.7 million vacancies last year, a decrease from 4.8 million in 2022 and an all-time high 7.3 million in 2021.
Moreover, the unemployment rate has been below 4% for 23 consecutive months, and the number of persons registering for unemployment assistance has stayed exceptionally low.
In December, the professional and business services sector saw an additional 239,000 job opportunities.
Manufacturing, retail commerce, healthcare and social support, and financial services all saw significant gains. However, unfilled vacancies fell by 121,000 in the lodging and food services business and 83,000 in the wholesale trade sector.
Resignations declined by 132,000 to 3.392 million in December, which is the lowest since January 2021.
Meanwhile, UPS, a parcel delivery company in the US, announced that it will lose 12,000 positions in response to a weaker economy and a labor dispute that has frightened away some consumers.
Calling 2023 a "difficult and disappointing year," Chief Executive Carol Tomé stated that the company was investing in artificial intelligence (AI) to improve efficiency.