U.S. October job openings exceeded expectations... Why does a benchmark interest rate cut still remain a strong option?

Source: BlockMedia Original Title: U.S. October Job Openings Exceed Expectations… So Why is a Rate Cut Still Likely? Original Link: The release of the U.S. October job openings and quits report (JOLTS) was delayed due to the federal government shutdown, and the final published results exceeded expectations, once again confirming the stability of the labor market. However, these results are not sufficient to change the Federal Reserve’s policy direction, and the market generally believes that a benchmark interest rate cut is more likely at the December FOMC meeting.

The U.S. Bureau of Labor Statistics (BLS) released the October JOLTS report on the 9th, showing 7.67 million job openings—far exceeding the market expectation of 7.11 million and marking a five-month high. This figure is close to September’s 7.658 million, indicating that the slowdown in job demand seen since summer has temporarily eased.

Even so, it is hard to say that the entire job market has entered a clear recovery phase. The number of hires in October was 5.1 million, with no significant difference from the previous month, and total separations also remained stable. In contrast, the number of layoffs reached 1.85 million, continuing a steady upward trend since August (1.73 million) and September (1.78 million). Voluntary quits were 2.9 million, down from 3.1 million in August and September, indicating a weakening willingness among workers to change jobs voluntarily. This is interpreted as a signal of rising uncertainty in the labor market.

Matthew Martin, Chief Economist at Oxford Economics, stated: “The difference between hires and quits in October was about 99,000, similar to the 119,000 increase in nonfarm payrolls in September. While the labor market hasn’t slowed sharply, the expansion momentum has weakened.” Overall, employment mobility is being seen as further confirmation of a “moderate slowdown” that the market has already detected.

Oren Klachkin, Chief Market Economist at Nationwide Mutual, also said: “The JOLTS data for September and October only confirm the trends the Fed has already identified. With inflation still not at the 2% target, the Fed is likely to take a proactive approach toward the labor market and opt for a 25 basis point rate cut.”

The market is also showing expectations for an easing monetary policy. According to CME FedWatch data, investors are reflecting more than an 87% probability that the FOMC meeting held this Wednesday and Thursday will cut the benchmark interest rate by 25 basis points to a range of 3.50%-3.75%.

A professional U.S. investment media outlet stated: “This JOLTS report is the last employment indicator released before the FOMC meeting. While it will serve as a reference for policy decisions, it is not enough to change the Fed’s tone. The market broadly believes there is still sufficient reason for a rate cut.”

Additionally, the Bureau of Labor Statistics plans to release the delayed October and November nonfarm payroll reports together on December 16.