Aftermath of government shutdown… U.S. job openings in October lowest in four and a half years [Cooling U.S. labor market]

U.S. job openings at lowest level since February 2021

Wage growth slowed from 3.4% in January to 2.5% in August

U.S. job openings fell to their lowest level since February 2021. Analysts say the prolonged federal government shutdown is clearly cooling the labor market.

CNBC said on the 4th (local time), citing U.S. job site Indeed, that the 'job postings index' stood at 101.9 as of October 24. This is an index calculated based on February 2020 (index 100) and is the lowest level since February 2021. The figure represented a 0.5% decline from early October and about a 3.5% decrease from mid-August.

The shutdown postponed this week's release of the Bureau of Labor Statistics (BLS) 'Job Openings and Labor Turnover Survey (JOLTS)'. As a result, Federal Reserve officials and economists are relying on alternative indicators to assess labor market conditions.

The last JOLTS data released by the BLS in August also showed a continued decline in job openings. At that time, job openings were 7.23 million, similar to July but down 7% from January this year.

Other Indeed indicators showed the same trend. Along with fewer job postings, wage offer levels also trended downward. Based on job postings registered on Indeed, wage growth slowed from 3.4% in January to 2.5% in August.

Signs of a cooling labor market are directly affecting Fed policy. At last week's Federal Open Market Committee (FOMC) meeting, the Fed cut its policy rate by 0.25 percentage point to the 3.75–4.0% range. It was reported that 10 of the 12 members voted in favor of the cut.

Fed Governor Lisa Cook said in a speech on the 3rd (local time), "Hiring is slowing," and "This trend is being detected in real time in job posting data including Indeed." She added, "The unemployment rate rose slightly over the summer, and that is a worrying sign."

The monthly nonfarm payroll report from the BLS is also delayed due to the shutdown. According to a Dow Jones survey, economists estimated that if October's employment data had been released as normal, payrolls would have fallen by 60,000 jobs and the unemployment rate would have risen to 4.5%.

The Indeed data is interpreted as indicating that a prolonged government shutdown is leading to slower hiring and stagnant wages. Accordingly, if labor-market weakness continues, the likelihood of further Fed rate cuts is expected to gradually increase.

New York=Shin-young Park, correspondent nyusos@hankyung.com