Signs of Weakness? Job Openings Drop, So Does Private Hiring

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What's Happening Today

Are you looking for a job? There are still jobs available if you want one—but that's changing. Today, the Labor Department released the latest results from its Job Openings and Labor Turnover Survey (JOLTS) and it showed the number of job openings declined to 10.3 million in October. Economists expected 10.5 million openings.

The decline comes after job openings had risen in September to just over 10.7 million, showing that the Federal Reserve's efforts to cool the economy might be starting to hit the labor market. But the labor market still remains robust as there are almost twice as many job openings for every person looking for one.

The data comes days before the Labor Department releases its much anticipated November jobs report. It will show if unemployment has ticked upward, though economists are expecting it to remain unchanged.

We got our first glimpse of the shifting labor market outlook in today's ADP unemployment report. Private employers added 127,000 jobs to the economy last month, the slowest rate since January of last year. While the ADP report isn't always an accurate reflection of what's to come in the government's jobs report, it could be a sign that the labor market is starting to lose some of its strength.

You might not care too much about the monthly ups and downs of the labor market, but the Fed does. The central bank often looks at the job market as a proxy of the economy's strength. The more people that are employed, the stronger the economy is, making it more resilient to interest rate hikes.

If Friday's jobs report shows that unemployment has remained unchanged, the central bank might be more willing to hit us with another aggressive interest rate hike. An additional 75 basis points would make loans like mortgages and credit card debt much more expensive.

The Fed is set to meet in two weeks and will make a decision on rates. Stock markets remained tentative this morning, and investors await remarks from Fed Reserve Chair Jerome Powell this afternoon, listening for any clues on what policy makers might do at their next meeting.

-Kristin

Editors' Picks

Key Gauges of US Economy Paint Mixed Third-Quarter Picture (Bloomberg)

Job Openings Report to Indicate Tightness of Labor Market (The Wall Street Journal)

U.S. Pending Home Sales Fall 4.6% in October (Reuters)

Millennials Shut Out Of The Housing Market, Again (The Washington Post)

What Is Conditional Loan Approval? (The Balance)

Federal Reserve Dictionary: Your Guide to the Jargon (The Balance)

The Cities Where Home Prices Are Falling The Most (The Balance)

Term of the Day

JOLTS

JOLTS is the Job Openings and Labor Turnover Survey, which is conducted by the U.S. Bureau of Labor Statistics (BLS) each month. The survey includes information on job openings and labor turnover data, which is used by economists, government officials, and data analysts. A random sample of 21,000 private, nonagricultural businesses are surveyed.

Understanding the demand side of labor shows the flow of workers in and out of the labor market. Using JOLTS data is different from using the unemployment rate to examine the U.S. labor market because JOLTS measures the excess supply of labor.

Off the Charts

Rising rates are bad news for bond investors due to the inverse relationship between prices and yields. When rates go up, prices go down—and in some cases, the move can be severe.

As a result, traders who invest in fixed-income assets often try to protect against rising rates by building diversity into their portfolios with asset classes that can perform well even when rates are increasing.