Tendency to cool down
The job engine in the USA is no longer running so well
January 3, 2024, 5:10 p.m
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The job market in the USA has been very strong for a long time. But there are signs of a slowdown. What happens next also depends on the decisions of the US Federal Reserve.
The labor market in the USA is showing signs of cooling down. The number of vacancies, which serves as a measure of the demand for workers, has recently fallen. This key figure, which is also important for the Federal Reserve, fell to 8.79 million at the end of November, as the Ministry of Labor announced in its monthly survey (Jolts). Experts had expected 8.85 million. At the same time, the previous month’s figure was revised upwards to 8.85 million from the originally reported 8.73 million.
The government’s labor market report for December is due on Friday. Experts are expecting a job increase of 168,000, after 199,000 in November.
The US Federal Reserve Bank wants to combat inflation with a tight monetary policy line and cool down the hot labor market. Since the beginning of 2022, it has raised key interest rates from close to zero to a range of 5.25 to 5.50 percent and most recently paused them three times in a row.
Interest rate cuts expected in the near future
At the same time, the monetary authorities signaled a looser monetary policy course for 2024 in view of the ebbing wave of inflation. This triggered a euphoria about interest rate cuts on the financial markets, which subsided somewhat at the beginning of the year.
However, investors expect interest rates to be cut twice as much as announced by the US monetary authorities, who are planning a cut of 0.75 percentage points this year. According to the expectations of the financial markets, the Fed is likely to remain silent in January.
For March, the probability of a first interest rate move down by a quarter of a percentage point is estimated at around 67 percent on the futures markets. Investors hope that the minutes of the most recent Fed meeting will provide information about the future course.