US Labor Market: Cooling But Not Weak Yet

Job openings missed expectations at 7.44 million in September, a mild slowdown from August. The details of the JOLTS report were also negative, except for hirings which continue their June rebound. Meanwhile, consumer confidence for October data beat expectations. The Conference Board’s labor differential – a proxy for the difficulty of finding a job – signaled a marginally tighter labor market from September.

The labor market continues to cool. The gap between quits and layoffs, which leads labor demand, ticked down and now sits below pre-COVID levels. Layoffs are rising, albeit from a low level.

The JOLTS confirm that the US economy is slowing and could soon approach a tipping point. Meanwhile, equities remain priced for a perfect soft landing. Considering this dichotomy, investors should be positioned more defensively going into next year, with tactical flexibility going into the US election next week.