WASHINGTON – US job openings unexpectedly rose in December and data for the prior month was revised higher, suggesting the labour market likely remains too strong for the United States Federal Reserve to start cutting interest rates in the first quarter.

A rate cut in 2024, however, remains in the cards with the report from the Labour Department on Jan 30 also showing Americans staying put at their current jobs, which could help to slow wage growth.

The number of people quitting their jobs, likely in part for greener pastures, dropped to a two-year low.

Fed officials are expected to keep interest rates unchanged at the end of a two-day policy meeting on Jan 31 against the backdrop of a resilient economy, which is being anchored by the labour market through consumer spending.

Financial markets have lowered the odds of a rate cut in March to below 50 per cent.

“Persistent demand for workers, while positive for continued economic growth, may throw a wrench into efforts to cool inflation early in 2024,” said Mr Ben Ayers, senior economist at Nationwide in Ohio. “This is again a sign of too much of a good thing, which should lead to a later-than-hoped shift to monetary policy easing.”

Job openings, a measure of labour demand, were up 101,000 to 9.026 million on the last day of December, the Labour Department’s Bureau of Labour Statistics said in its monthly Job Openings and Labour Turnover Survey, or JOLTS report.

Data for November was revised higher to show 8.925 million unfilled positions instead of the previously reported 8.79 million. Economists polled by Reuters had forecast 8.75 million job openings in November.

Job openings peaked at a record 12 million in March 2022. Demand for labour has remained fairly healthy despite tighter monetary policy. Since March 2022, the US central bank has raised its policy rate by 525 basis points to the current 5.25 per cent to 5.5 per cent range.

There were an additional 239,000 job openings in the professional and business services sector in December.

There were also notable increases in manufacturing, retail trade, healthcare and social assistance as well as financial activities sectors.

Unfilled jobs, however, decreased by 121,000 in the accommodation and food services industry and fell by 83,000 in the wholesale trade sector. The job openings rate was unchanged at 5.4 per cent.

Hiring rose by 67,000 to 5.621 million, lifted by professional and business services, accommodation and food services as well as state and local government. But healthcare and social assistance hiring declined by 119,000.

The hires rate rose to 3.6 per cent from 3.5 per cent in November. Layoffs increased by 85,000 to a still low 1.616 million, with the layoffs rate unchanged at 1 per cent.

Companies are generally hoarding workers following difficulties finding labour in the aftermath of the Covid-19 pandemic.

Consumers upbeat

Resignations fell by 132,000 to 3.392 million in December, the lowest level since January 2021.

The fourth straight monthly decline was led by healthcare and social assistance, where resignations decreased by 71,000. The resignation rate, viewed as a measure of labour market confidence, was unchanged at 2.2 per cent.

The relatively low resignation rate bodes well for slower wage inflation and price pressures in the economy.

Labour market strength, subsiding inflation and expectations of a rate cut helped to boost consumer confidence in January.

The Conference Board said in a separate report on Jan 30 that its consumer confidence index rose to 114.8 in January, the highest reading since December 2021, from a downwardly revised 108 in December. Economists had forecast the index rising to 115 from the previously reported 110.7.

The rise in confidence was across all age groups, with bigger gains reported for consumers 55 years and over.

Confidence improved for all income groups, with the exception of households with annual incomes of US$125,000 (S$160,000) and more, which recorded a marginal decline.

Consumers’ inflation expectations over the next 12 months dropped to 5.2 per cent, the lowest reading since March 2020, from 5.5 per cent in December.

The survey’s so-called labour market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, widened to 35.7 in January from 27.3 in December.

This measure correlates to the unemployment rate in the Labour Department’s monthly employment report.

The Labour Department is expected to report on Feb 2 that nonfarm payrolls increased by 180,000 jobs in January, according to a Reuters survey of economists. The economy added 216,000 positions in December.

Though employment growth has slowed from the brisk pace seen in 2022, the increase in payrolls remains well above the roughly 100,000 jobs needed per month to keep up with growth in the working-age population. The unemployment rate is forecast to rise to 3.8 per cent from 3.7 per cent in December. REUTERS