Job engine in the USA no longer running so hot
The US labor market has been very strong for a long time. However, 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. The number of job vacancies, which serves as a measure of demand for labor, has fallen recently. This key figure, which is also important for the Federal Reserve, fell to 8.79 million at the end of November, according to the Department of Labor's 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 expect job growth of 168,000, after 199,000 in November.
The Fed wants to combat inflation and cool the hot labor market with a tight monetary policy. Since the beginning of 2022, it has raised key interest rates from near zero to a range of 5.25 to 5.50 percent and has recently paused 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 stance for 2024 in view of the subsiding wave of inflation. This triggered an interest rate cut euphoria on the financial markets, which subsided somewhat at the start of the year.
However, investors expect interest rates to be cut twice as much as the US monetary authorities, who are aiming for a reduction of 0.75 percentage points this year. According to the expectations of the financial markets, the Fed is likely to remain silent in January.
On the futures markets, the probability of a first interest rate cut of a quarter of a percentage point in March is estimated at around 67%. Investors are hoping that the minutes of the most recent Fed meeting will shed light on the future course.
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The Fed's tight monetary policy, aiming to combat inflation and cool the hot labor market, has resulted in several interest rate increases. However, recent signs of a slowing labor market in the USA, such as a decline in job vacancies, may influence the Fed's future decisions, potentially leading to interest rate cuts in the near future.
Source: www.ntv.de
