Morning Report: Job openings fall

Posted on December 5, 2023 by Brent Nyitray

Vital Statistics:

Stocks are lower after Moody’s cut China’s debt outlook. Bonds and MBS are up.

Job openings fell to 8.7 million in October, according to the JOLTS report. This was well below Street expectations of 9.4 million. The job openings rate fell to 5.3%, which is down 0.3% MOM and 1.1% YOY. The quits rate was flat at 2.3%.

Job openings fell in health care / social assistance and finance.

Despite the drop in job openings, the ISM Services index expanded at a faster rate in November. “The services sector had a slight uptick in growth in November, attributed to the increase in business activity and slight employment growth. Respondents’ comments vary by both company and industry. There is continuing concern about inflation, interest rates and geopolitical events. Rising labor costs and labor constraints remain employment-related challenges.”

Tappable equity has returned to close to its 2022 peak, according to data from Black Knight. “Despite the resurgence in tappable equity among U.S. mortgage holders, elevated interest rates are making homeowners reluctant to extract that wealth,” Walden said. “Indeed, in recent quarters, equity withdrawal rates have been running at less than half their long-run averages. Mortgage holders extracted a mere 0.41% of tappable equity available at the beginning of Q3. That’s some 55% below the average withdrawal rate seen in the 12 years leading up to the Fed’s most recent tightening cycle. That’s equivalent to $54 billion – $250B over the last 18 months – in ‘missing’ withdrawals that might have otherwise stimulated the broader economy.”

The large amount of equity in homes is also contributing to the low delinquency rate, as troubled borrowers often have 20% equity in their homes and can simply sell the property and move on.

Filed under: Economy | 41 Comments »