The number of job openings in the US fell in October

The news:

The number of vacancies fell significantly in October, reaching the lowest level since March 2021 Labor Department announced on Tuesday.

There were 8.7 million vacancies in October, significantly less than the 9.3 million in September. according to the Research into vacancies and labor turnover. That was lower than economists’ expectations of 9.3 million job openings.

Layoffs were little changed, as were layoffs, which generally reflects workers’ confidence in their ability to find new work.

Why it matters: The state of the labor market influences interest rate policy.

The labor market is being closely watched by the Federal Reserve as it considers its interest rate policy. A cooling labor market tends to fuel predictions that the Fed will not raise rates further. These have risen from almost zero to 5.25 to 5.5 percent in March 2022.

The labor market has been surprisingly resilient since the Fed began raising rates in a campaign to curb inflation. But now that the labor market is showing signs of cooling, so too is consumer spending. Many companies told investors that customers disengaged last quarter, spending less on products and more on services and experiences. The Fed’s preferred inflation measure confirmed that consumer spending slowed in October.

At the same time, investors are increasingly hopeful that the Fed is done raising rates. Federal Reserve Chairman Jerome H. Powell recently suggested in a speech that the central bank would leave interest rates steady if data continued to point to a cooling economy.

Background: Unemployment and vacancies have returned to previous levels.

Although the job market is slowing, it remains a healthy landscape for workers. The unemployment rate rose to almost 4 percent in October, in line with pre-pandemic levels.

The number of vacancies reached a record of more than 12 million in March 2022 and has been on a downward trend since then. The last time vacancies hovered around nine million – where they are now – was in the spring of 2021.

While inflation has slowed significantly since the Fed began raising rates in March 2022, it remains above the central bank’s 2 percent target.

The Fed’s preferred inflation measure fell to 3 percent in October from a year earlier. But without taking into account food and fuel prices, which are volatile and less sensitive to the Fed’s policy actions, the interest rate was 3.5 percent.

What now? The November jobs report will be released on Friday.

The November jobs report will be released by the Department of Labor on Friday. Economists predict the unemployment rate will remain around 4 percent, with a gain of about 180,000 jobs.

That report will be one of the last insights into the state of the labor market before the Fed’s next policy meeting on December 12-13.