U.S. job vacancies plunged to a more than three-and-a-half-year low, but consumer confidence rose to a nine-month high

U.S. job openings fell to a three-and-a-half-year low in September, but nearly all of the decline was in the South, indicating that Hurricanes Helen and Milton have temporarily dampened demand for labor.

The Labor Department released a report on Tuesday showing that consumer sentiment towards the job market improved sharply in October, helping the consumer confidence index rise to a nine-month high.

Hurricanes and a strike by factory workers in the aerospace industry are expected to temporarily dampen job growth in October, with economists arguing that labour market conditions have not materially changed since the September surge.

"Labor market data is mixed, but the latest survey of consumers in October suggests that the sharp drop in job openings at the end of September may just be a cover for the story of economic weakness."foreign exchange trading platformChief economist Christopher Rupkey said.

The U.S. Department of Labor's Bureau of Labor Statistics Job Vacancies and Labor Mobility Survey (JOLTS) reported that job openings measuring labor demand fell by 418,000 to 7.443 million as of the last day of September, the lowest level since January 2021.

(One-hour chart of the US dollar index)

The figure for August was revised down to 7.861 million, from 8.04 million. Economists polled by Reuters had forecast 8 million. There were 1.09 jobs per unemployed person, little changed from 1.10 in August.

Job openings plummeted 325,000 in the southern United States, much of which was devastated by Hurricanes Helen and Milton. Job openings fell slightly in the West, East and Northeast.

The vacancy rate fell to 4.5% in September from 4.7% in August, the lowest level since December 2020. Hiring increased 123,000 to 5.558 million. Hiring rose to 3.5% from 3.4% in August.

The number of layoffs increased by 165,000 to 1.833 million in September. The layoff rate rose to 1.2% from 1.0% in August, the highest level since March 2023. Fewer resignations brought the resignation rate to 1.9% from 2.0% in August, the lowest level since June 2020, indicating that wage pressures will continue to weaken, allowing the Federal Reserve to continue cutting interest rates.

A Reuters poll of economists expects non-farm payrolls to increase by 115,000 in October, compared with 254,000 in September. That would be the smallest increase in six months. The unemployment rate is expected to remain unchanged at 4.1 percent.

The Federal Reserve is expected to cut interest rates by 25 basis points at its November meeting, and before that, the Federal Reserve cut interest rates by 50 basis points in September to start the easing cycle.

In a separate report on Tuesday, WBR said consumer confidence rose to a nine-month high in October as views on the labour market improved, with little concern about the November 5 US election.

The share of consumers who say jobs are "plentiful" rose to 35.1% from 31.3% in September. About 16.8% of consumers said jobs were "difficult to find", down from 18.6% last month.

The labor market gap, based on respondents' perceptions of "abundant job opportunities" or "difficult jobs to find," rose to 18.3 from 12.7 in September. This indicator is related to the unemployment rate in the Labor Department's monthly employment report.

More consumers plan to buy a car in the next six months, rising to the highest level since December 2020.

Jeremiah Kohl, economist at Wells Fargo, said: "We were surprised by the increase in the number of consumers planning to buy a home in the run-up to the US election. Historically, election uncertainty has affected consumer confidence in the months leading up to an election. However, in the minds of consumers, the election still ranks behind economic concerns."

A separate report from the Commerce Department's Bureau of Statistics showed that the goods trade deficit widened 14.9 percent to $108.2 billion in September, the highest level since March 2022, as imports surged, prompting economists to cut their estimates for third-quarter gross domestic product.

However, most imports end up in retailers' inventories, which should reduce the impact of trade on GDP.

The government is scheduled to release an early estimate of third-quarter GDP on Wednesday. The Atlanta Fed cut its forecast for third-quarter economic growth from 3.3% to an annualized rate of 2.8%. The economy grew at an annual rate of 3.0% in the second quarter.

Goods imports rose 3.8% to $282.4 billion in September, also the highest level in two and a half years. Goods exports fell 2.0% to $174.2 billion.

Wholesale inventories fell 0.1% in September and rose 0.2% in August. However, retail inventories rose 0.8% after rising 0.7% in August.

Matthew Martin, senior US economist at Oxford Economics, said: "Trade will continue to weigh on growth in the coming quarters because imports are relatively strong."