U.S. job openings in December fell to a three-month low, indicating a cooling trend in the labor market

According to the Zhitong Finance APP, the U.S. Department of Labor released the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, showing that the number of job vacancies in the U.S. fell to 7.6 million in December, below market expectations and significantly down from the revised 8.16 million in November. This data marks a three-month low, indicating that the labor market is gradually slowing down.

The data shows that the decline in job vacancies was mainly dragged down by the professional and business services sector, partially offsetting the growth in the previous two months. Additionally, there was a noticeable decline in job vacancies in the healthcare and social assistance industry, as well as in the finance and insurance sector. This suggests that after experiencing growth in the previous months, job vacancies have returned to a downward trend.

The decrease in job vacancies indicates a cooling demand in the labor market, which may further suppress wage growth and support the Federal Reserve's judgment that the employment market is no longer a source of inflationary pressure.

The ratio of job vacancies to unemployed individuals, closely monitored by the Federal Reserve, remained at 1.1 in December, unchanged for the sixth consecutive month. In contrast, this ratio peaked at 2:1 during 2022, indicating a tighter labor market at that time.

Following the data release, the yield on two-year U.S. Treasury bonds fell, while the stock market maintained its upward trend, reflecting a moderate interpretation of the cooling employment market by the market.

Bloomberg economist Stuart Paul pointed out that the overall decline in job vacancies may exaggerate the extent of the cooling labor market. He stated, "The increase in resignations, stable layoff rates, and the rise in job vacancies in cyclical industries indicate that the labor market is more stable than the overall data suggests. However, we still expect labor demand to continue to show a moderate cooling trend in the coming months."

The hiring rate in December remained at 3.4%, still at a low level over the past decade, while the layoff rate also remained at historically low levels. Meanwhile, the "quit rate," seen as a measure of labor market confidence, remained at 2%. This data indicates that workers' confidence in finding new jobs has declined compared to a few years ago.

The market is currently focused on the government’s monthly employment report to be released on Friday, which is expected to show a slowdown in hiring activity in January, while the unemployment rate may remain at 4.1%. Additionally, the report will include revised employment growth data up to March 2024, based on new population estimates from the U.S. Census Bureau.

Although JOLTS data provides key indicators of the employment market, some economists have questioned its reliability, partly due to the low response rate of the survey and the significant data revisions. For example, a similar index from the job posting website Indeed shows that job vacancies actually rose slightly in December.

Overall, the decline in job vacancies in December further indicates that the U.S. labor market is gradually cooling down, which may impact the Federal Reserve's future monetary policy decisions. However, due to the discrepancies in trends shown by different indicators, the market still needs to pay attention to subsequent employment data to more accurately assess the true state of the labor market