In November, U.S. JOLTS job openings significantly exceeded expectations, reaching a six-month high, while voluntary resignations fell again

The U.S. Bureau of Labor Statistics reported on Tuesday that job openings in the U.S. exceeded 8 million in November, significantly surpassing expectations and exceeding estimates from all economists surveyed by the media, reaching a six-month high. This JOLTS data was primarily driven by growth in the business services sector, while demand for workers in other industries was mixed.

In November, U.S. job openings reached 8.098 million, compared to an expected 7.74 million, with the previous October figure revised up from 7.744 million to 7.8 million. The job openings in November continued the rebound trend seen in October. Prior to this, job openings unexpectedly plummeted in September, hitting a more than three-year low.

Since reaching a record of 12.18 million in March 2022, job openings have generally shown a downward trend due to a significant rate hike by the Federal Reserve that led to a slowdown in demand. In recent months, with the Federal Reserve cutting rates, JOLTS data has rebounded.

By industry, the increase in JOLTS job openings was almost entirely driven by vacancies in professional and business services as well as the finance and insurance sectors. Among these, professional and business services reached their highest level in nearly two years. Meanwhile, job openings in accommodation and food services, as well as manufacturing, decreased.

The ratio of job openings to unemployed persons in November was 1.1, slightly up from October, a ratio that the Federal Reserve closely monitors. This ratio peaked at over 2 in March 2022. Before the COVID-19 pandemic, this ratio was 1.2 and is currently slightly below pre-pandemic levels.

The voluntary resignation rate in November fell to 1.9%, the lowest level since the early days of the pandemic, with resignation rates across all industries remaining low. The number of voluntary resignations dropped to 3.065 million, a four-year low. A higher number of voluntary resignations indicates a tighter labor market, where workers feel confident leaving their current jobs for better opportunities; conversely, a lower number suggests a lack of confidence in finding new employment.

The number of layoffs remained relatively low and unchanged.

Hiring slowed down, reaching the lowest level since April 2020. In November, hiring decreased by 125,000, falling to 5.269 million.

As the U.S. labor market cools, related data has even surpassed inflation, becoming the most closely watched economic data by the market, with policymakers and investors using it to assess whether more signals of a soft landing for the U.S. economy have emerged. Since September of last year, the Federal Reserve has gradually lowered interest rates in hopes of avoiding further weakness in the U.S. labor market The recent increase in job vacancies has broken the downward trend of the past three years. It now appears that the U.S. labor market is in a better state, combined with the fact that inflation has remained stubbornly high in recent months, reducing expectations for further interest rate cuts by the Federal Reserve this year.

At the December FOMC meeting, Federal Reserve Chairman Jerome Powell stated that the U.S. labor market is cooling, but it is doing so in a gradual and orderly manner, indicating that the Fed's focus has firmly returned to inflation. The minutes from the Fed's December meeting will be released on Wednesday.

The JOLTS report is one of the labor indicators that U.S. Treasury Secretary Janet Yellen valued most during her tenure as Fed Chair. This indicator is also highly regarded by the Fed as labor market data. However, it is important to note that some economists question the reliability of JOLTS statistics, as the current response rate for the survey is about half of what it was a few years ago. A similar index released by the job site Indeed shows a slight increase in job vacancies in November.

JOLTS data typically lags non-farm payroll data by one month. This Friday, the U.S. will release the significant December non-farm payroll report. The market expects the non-farm payroll data to show a slowdown in hiring by employers in December, but still at a healthy level, with the unemployment rate likely remaining at 4.2%.

Alongside the JOLTS job vacancies, the U.S. ISM Services PMI will also be released, which has significantly exceeded expectations. Following the release of these two better-than-expected heavyweight data:

• Traders are no longer fully betting on the Fed cutting rates before July.
• The S&P 500 index turned negative, with the Nasdaq down 0.5%.
• The yield on the U.S. 10-year Treasury bond rose over 3 basis points, reaching a daily high above 4.67%, with an intraday increase of over 4 basis points; the yield on the two-year Treasury bond rebounded 3 basis points to 4.31%, overall up 3.5 basis points.
• Spot gold fell by $3, retreating below $2,650 per ounce, with an overall increase of less than 0.5%