Summary
In November, employers cut the number of workers, leading to a drop in the employment rate to its lowest level since 2014, excluding the immediate months following the onset of the pandemic in 2020. However, there were many job opportunities available and no signs of increased job layoffs, so the labor market is losing momentum but isn’t collapsing. Slower hiring may reduce inflationary pressures and encourage the Federal Reserve to start lowering the benchmark interest rate next spring.
Employers Pull Back on Hiring in November
If you were looking for a job in November, you may have found many job opportunities, but getting a job was another matter. Employers reduced the number of workers by 363,000 compared to October, resulting in a drop in the employment rate from 3.7% in October to 3.5% in November, according to the Bureau of Labor Statistics on Wednesday. This was the lowest level since 2014, excluding the pandemic-related shutdown months in early 2020.
Decrease in Job Openings
The number of job openings fell slightly to 8.8 million in November from 8.9 million in October. This means there were 1.4 job openings for every unemployed person, a figure that exceeds the historical average, even though it is less than the 2-1 ratio at the peak of the hot labor market in March 2022. The figures were in line with analysts’ expectations surveyed by Dow Jones Newswires and The Wall Street Journal.
Stability of the Labor Market
The still steady number of job openings underscores the resilience of the labor market over the past year, surprising many economists who expected mass layoffs. The Federal Reserve’s campaign to raise interest rates to combat inflation has made borrowing more expensive for businesses and individuals, yet people are still spending, and companies continue to pay their employees through the financial storms.
No Signs of Expected Layoffs
Despite the long-anticipated slowdown in hiring, there were no signs of layoffs in the November data despite the slowdown in hiring. The layoff rate remained at a historically low rate of 1%.
Decrease in Resignations
There was also a decline in the number of resignations, with 3.5 million people leaving their jobs voluntarily, a decrease of 157,000 from October, suggesting that workers are not confident in finding better options than the jobs they currently hold.
Impact of Cooling Labor Market on Inflation
The cooling labor market should gradually ease upward wage pressures, driving inflation down further. According to Nancy Vanden Houten, the chief U.S. economist at Oxford Economics, this could give policymakers at the Federal Reserve room to mitigate economic pressures due to rising interest rates, and could encourage them to lower the benchmark interest rate from its highest level in 22 years by May.
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