JOLTS, ISM Data Tank Rate Cut Expectations — Evening Brief – 01.07.25
U.S. job openings increased to 8.096 million in November, marking the first print above eight million since May, exceeding the consensus of 7.650 million and surpassing the 7.839 million recorded in October, as reported by the Bureau of Labor Statistics (BLS). The previous month’s figure was revised from the initial estimate of 7.744 million.
Following a year devoid of any positive two-month gain periods, the BLS reported the most significant two-month increase in job openings in November since March 2022. The number of job openings rose in professional and business services (+273,000), finance and insurance (+105,000), and private educational services (+38,000), but declined in information (-89,000).
The overall rise resulted in the job openings rate climbing to 4.8% from the previous 4.7%, which was revised from 4.6%. The quits rate decreased to 1.9% from 2.1% in October, suggesting diminished worker confidence in securing alternative employment upon quitting.
The number of hires decreased to 5.269 million from 5.394 million in October and from 5.569 million in November 2023. The hiring rate decreased to 3.3% from 3.4% in the preceding month.
Layoffs and discharges rose to 1.765 million from 1.748 million in October, but the 1.1% rate remained constant from the previous month. It’s only up slightly from 1.0% in November 2023. The layoff and discharge rate was highest in the arts, entertainment, and recreation sector at 3.5% up from 3.3% in October and 2.5% a year ago.
Separately, the ISM U.S. Services PMI increased to 54.1 in December from 52.1 in November, exceeding the consensus estimate of 53.5, as reported by the Institute of Supply Management. The index remains above 50, indicating that the most recent reading represents the sixth consecutive month of expansion in the services sector, reflecting growth for the 52nd time in 55 months since the recovery from the pandemic-induced recession.
Nevertheless, beneath the surface, conditions are less favorable as Prices Paid surged from 58.2 to 64.4, while employment declined to 51.4. Producers face challenges from a strong currency, possible tariffs, and overall uncertainty stemming from the resumption of dockworkers’ contract discussions on Tuesday.
On cue, U.S. Treasury yields rocketed higher following the strong data. Keep in mind that the first four trading days of 2025 have seen the uptrend in U.S. Treasury yields that began on September 17 – the day the Federal Reserve slashed interest rates by 50 basis points – gather momentum.
The U.S. 2-year yield has rallied roughly nine basis points to 4.26% while the U.S. 10-year yield is up nearly 20 basis points at 4.68%, driving the US 2-year/10-year yield spread to 39 basis points – its widest level since May of 2022. This has occurred while the central bank has cut interest rates by 100 basis points.
The odds of another interest rate cut at the next FOMC meeting on January 29, however, are just 4.8%, according to the CME FedWatch Tool. Moreover, the market is no longer pricing in a quarter-point rate cut by July as it was following the December FOMC meeting.