Mixed Message to Fed: Layoffs, Job Openings Increase Simultaneously

The “no hire, no fire” job market of yesteryear has given way to something far stranger.

On Tuesday, the US Bureau of Labor Statistics (BLS) published its October Job Openings and Labor Turnover Survey (JOLTS), delayed due to the government shutdown, which showed an unexpectedly strong uptick in job openings. It came just a week after ADP payroll data revealed that November marked the biggest loss of US private sector jobs since March 2023. So is it a “more hire, more fire” job market? Probably not.

JOLT to the System

The number of available positions climbed to 7.67 million in October, according to the JOLTS report. That’s up from September, good for the highest mark in five months, and beat all the estimates of economists surveyed by Bloomberg. In fact, most predictions had forecast a decline in open roles, commensurate with the uptick in layoffs shown in both JOLTS and ADP data. On the other hand, the uptick in openings was driven by industries both predictable and seasonal: healthcare, the most significant driver of job growth all year, as well as retail and warehousing.

Still, there may be reason to believe the delayed JOLTS data is not a pixel-perfect snapshot:

• Due to the shutdown, the bureau had to forgo its usual “monthly alignment methodology” to clean up the JOLTS data, Comerica Bank Chief Economist Bill Adams told The Daily Upside, adding “this release should be taken with more than the usual grain of salt.”
• Meanwhile, the most recent jobs report from consultant firm Challenger, Gray & Christmas, published last week, showed that US employers have announced 497,151 planned hires through November this year, down 35% year-over-year and the lowest mark since 2010. The 372,520 planned seasonal hirings this year are the fewest since the firm began tracking the stat in 2012.

Cut It Out: All told, traders are penciling in a roughly 88% chance of a cut, same as a week ago, according to CME Group’s FedWatch tool. After that? “The Fed will likely give ambiguous forward guidance about the January decision,” Adams said, citing the shutdown-spurred delay of government data. “They will get a lot more information between now and the next decision on January 28. If the job market softened further at the turn of the year, the Fed is likely to make another cut in January, despite frustrations that inflation is still over their target.” Yes, we’re already talking about the next Fed meeting.