US: Employment conditions are firming more slowly - Wells Fargo

Data released today showed that US jobs openings dropped to the lowest in five months in November. According to analysts from Wells Fargo, the lack of improvement in recent months suggests slower payroll growth in coming months. 

Key Quotes: 

“Concerns about the industrial side of the economy have grown in recent weeks amid softer readings from purchasing managers’ indices, weaker capex orders and a pullback in commodity prices. Labor market conditions remain strong, as evidenced by the blockbuster employment report last Friday and the record share of small businesses reported to have at least one job opening that is hard to fill. Yet, the latest read on job openings hints that employment conditions are firming more slowly.”

“Job openings fell by 243,000 in November to a five-month low of 6.9 million. While a pullback in openings is not unusual in months where hiring surges, since employers are filling vacant positions, we already know payrolls rose by a below-trend 176,000 in November. Therefore, we would not expect much of a rebound in openings for December after employers added 312,000 jobs to their payrolls.”

“The high level of job openings is consistent with strong demand for workers, but the pullback over the past few months suggests that payroll growth is likely to moderate. At the same time, if the slip in quits is the start of a trend, wage pressures may begin to stabilize, suggesting the FOMC has less need to raise rates further this year.”