Labor Demand Holds Strong Despite Higher Rates
January 4, 2023
Demand for workers held nearly steady at historically high levels in November, suggesting that the labor market remained strong heading into 2023, despite higher interest rates and concerns about an impending recession.
The Job Openings and Labor Turnover Survey (JOLTS) for the month showed that there were nearly 10.5 million job openings, down slightly from October’s total, but well above the 10 million projected by FactSet and pre-pandemic norms. In November, there were 1.7 job openings for every unemployed worker actively looking for a job.
As a share of the total labor force, job openings held steady at 6.4%, indicating strong demand for workers despite the Fed’s efforts to cool the economy and bring down inflation, which has been driven in part by higher wages.
The report also showed that layoffs stayed low, despite some layoff announcements from high-profile businesses. The share of workers who quit their jobs voluntarily increased in November from a month earlier, a sign Americans were still confident in their employment prospects. A high quit rate could keep pressure on wage growth, because workers typically only voluntarily leave jobs because they can receive higher wages elsewhere.
The JOLTS survey is closely watched by Federal Reserve officials for signs of labor market slack, and the recent report shows how resilient the labor market has been, which is likely to keep the Fed on its aggressive path of rate hikes.