Today’s preliminary jobs report – the JOLTS or Job Openings and Labor Turnover Survey – came in well below expectations this morning. It was considered a big miss, with job openings “falling dramatically.”

Job openings tumbled in October to their lowest in 2½ years, a sign the historically tight labor market could be loosening.

Employment openings totaled a seasonally adjusted 8.73 million for the month, a decline of 617,000, or 6.6%, the Labor Department reported Tuesday. The number was well below the 9.4 million estimate from Dow Jones and the lowest since March 2021.

The decline in vacancies brought the ratio of openings to available workers down to 1.3 to 1, a level that only a few months ago was around 2 to 1 and is nearly inline with the pre-pandemic level of 1.2 to 1.

Federal Reserve policymakers watch the report, known as the Job Openings and Labor Turnover Survey, closely for signs of labor slack. The Fed has boosted interest rates dramatically since March 2022 in an effort to slow the labor market and cool inflation, and is contemplating its next policy move.

Such a stark contrast from the press conference I just watched to the BLS release on job openings just released.
For some moronic reason, the Fed watches this way more closely than they should. But another 617k openings went away. pic.twitter.com/NOc26M0cpd

— Frog Capital (@FrogNews) December 5, 2023

As CNBC’s Rick Santelli noted when the numbers came out this morning, it’s the lowest number since 2021 and there was downward movement in the previous month’s numbers, too.

“…and there was even a subtle revision lower to last month’s number from 9,555,000 to 9.350,000. So a big miss there….”

The losses in job openings were across the board…

…Declines in job openings were widespread by industry.

The biggest sector decline was education and health services (-238,000), followed by financial activities (-217,000), leisure and hospitality (-136,000), and retail (-102,000).

…but surely it seems strange to have losses of that magnitude in retail in the month before Christmas? Usually retail is crying for help, so the question is what does this portend? Are stores not seeing the traffic they’d normally anticipate, and feel they can get by with the folks they have on hand? Or are what customers they have not spending what retailers had anticipated, and the bottom line won’t allow for more help?

It really is interesting. But there is no question that consumers are under pressure, and as their budgets go, so go retailers – even for the make-it-or-break-it holidays

Shoppers hunting for big deals packed malls on Black Friday as retailers stepped up discounts and offered other perks to entice hesitant customers who are sticking to stricter budgets this year.

Consumers are coming under pressure as their savings dwindle and their credit card debt grows. Although they have gotten some relief from easing inflation, many goods and services like meat and rent are still far higher than they were three years ago.

As far as the ratio of job openings to workers, that has shifted all the way down from 2 openings for every worker to now 1.3 to 1. Powell at the Fed has been watching that closely, as job market tightness is one of his inflationary barometers. Wall Street and analysts seem to believe this closer number almost guarantees the rate hike pause continues.

…Big picture: The labor market has lost some of its sizzle and is likely to cool off even further. That’s good news for the Fed as it aims to tame inflation without triggering a recession.

The central bank is widely expected to leave interest unchanged at its next big meeting in a week.

Looking ahead: “This is a clear indication that the labor market continues to weaken and should confirm that no additional rate hikes will be announced at the December [Fed] meeting,” said Eugenio Aleman, chief economist of Raymond James.

Market Update – JOLTS JOLTS JOLTS

With the Fed Funds rate still holding strong at a rate of 5.5% and we had been hearing "higher for longer" for the past six months

However, today's JOLTS job data (normally an ignored report by markets) came in well below the forecast – does it… pic.twitter.com/cn28dCEYh7

— Joseph John Nichols | Mortgage (@josephjnichols) December 5, 2023

“…From the Fed’s perspective, the reason weakening in the job market is so necessary is because the more job openings there are the more likely we are to see high wage growth (leading to inflation becoming entrenched)

We have not seen much decline in wage growth but it would be expected to be the next domino to fall…”

Some are even betting on the Fed easing at least a quarter point in March.

The monthly revisions to the data have been something else entirely and have engendered their own level of frustration.

People returning back to work after COVID make up the majority of Biden jobs so he did not create squat. Even after we get back to Trump levels you can see the Biden economy is struggling to create additional jobs where jobs were a steady climb under Trump. pic.twitter.com/NiuVLCCCsY

— jschner (@jschner2) December 5, 2023

There is speculation that employers may begin hiring again if those rates start going down again, but for right now, hiring is on hold. It’s just too expensive for businesses right now, and the regulatory climate too uncertain.

"Employers are entering a 'staffing strategy sabbatical' as nearly 70% of small business owners are neither hiring nor reducing staff. But expect hiring to pick up again in the Spring as the Fed may begin reducing rates." – CEO @ACrapuchettes on the Oct. JOLTS https://t.co/ToKuti8AzC

— RedBalloon | Free to Work (@RedBalloonWork) December 5, 2023

The Labor Department’s non-farm payroll numbers for November come out Friday. Analysts are predicting a bump of 40K jobs from October’s report, from 150K to 190K.

The number will be interesting, as well seeing where their revisions to previous months shake out.