The labor market continues to defy expectations, with 11 million positions open at the tip of the yr, the Labor Department said on Wednesday.
The number compares to 10.5 million jobs open a month earlier and was well above estimates of 10.3 million.
The rise got here from huge gains in accommodation and food services (up 409,000), retail trade (up 134,000), and construction (up 82,000). Jobs decreased by 107,000 in the knowledge sector.
“Jobs growth is more likely to proceed to slow over the following three months because the U.S. economy moves away from the vaccination recovery phase and corporations increasingly come to terms with elevated rates of interest and weaker consumer demand,” in response to the report by John Leer, chief economist, and economic analyst Jesse Wheeler.
Political Cartoons on the Economy
“Within the near term, staff will proceed to be reallocated from firms and sectors that overhired through the pandemic to people who still have job openings, limiting the chance of an outright jobs contraction for the following few months,” they added. “Looking ahead, the range of employment scenarios diverges over the following three to 6 months, with the fate of the U.S. economy hanging within the balance.”
How tight the labor market is and whether wage pressures are continuing can be a key focus of the Federal Reserve because it completes its two-day meeting Wednesday with an announcement of a probable rate of interest increase of 25 basis points. Markets can be watching to see what Federal Reserve Chairman Jerome Powell says at his press conference following the meeting.
On Tuesday, the federal government reported that the employment cost index, a measure closely watched by the Fed, dipped greater than expected to a 1% gain within the fourth quarter from 1.2% previously. Falling wage growth could be something the Fed considers in setting rate of interest policy.
“The incontrovertible fact that wage growth is cooling despite persistent labor market tightness is encouraging from the angle of monetary policy,” BCA Research wrote in a note Wednesday morning. “Notably, recent Fed communications have emphasized the role of ex-shelter core services inflation in sustaining high levels of overall price pressures. On this context, decelerating service sector wages in Q4 marks a step forward for the central bank to realize its inflation goal.”
“Nevertheless, a pause in monetary policy tightening – not to say an outright pivot to cutting – remains to be a few months away,” the firm added. “Our US Bond strategists expect the Fed to deliver a 25bp hike on Wednesday, and again in March. Provided inflationary pressures proceed on their downward trajectory, a pause is probably going thereafter.”
