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Not All Job Openings Carry The Same Weight

  • Labour market tightness remains acutely in focus as a key determinant of how much higher the Fed will take rates once or if it steps down to a 25bp hike on Feb 1 as now priced.
  • Latest weekly jobless claims data continued to show more sign of material deterioration, falling back below 2019 averages although average hourly earnings clearly disappointed in the December payrolls report with significant downward revisions leaving a softer trend at 4% annualized.
  • JOLTS job openings have regularly been referenced by Chair Powell, touching a high of 11.86M back in March or 1.99 times the number of unemployed. This has since dipped to 10.5M or 1.74x in November but is doing so at a slower rate the Fed would like.
  • Breaking these openings down by industry, the sharpest moderation from the March peak has been in lower paying industries (notably retail trade & other services), perhaps biasing the recent softer trend lower.
  • Some of this effect should be captured by composition-adjusted measures such as the Employment Cost Index, keenly awaited on Jan 31, after yesterday’s Atlanta Fed wage tracker moderated 0.3pps to a still historically elevated at 6.1% annualized on a 3-month smoothed basis in December.

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