U.S. job openings experienced a decrease in December, indicating a cooling labor market while still exhibiting signs of health.
According to the Labor Department’s recent report, job vacancies fell to 7.6 million from 8.2 million in November. This figure is significantly lower than the 8.9 million openings recorded a year ago and the peak of 12.2 million seen in March 2022, during the economic recovery from COVID-19-related shutdowns. Additionally, the reported number of job openings was below the anticipated 7.9 million predicted by economists.
The decline in job vacancies was accompanied by a reduction in layoffs, which hints at job security for American workers. Meanwhile, the rate of employees voluntarily leaving their jobs increased slightly, though it remained below levels seen before the pandemic. After experiencing a surge in 2021 and 2022, the number of employees resigning has lessened, as many now feel uncertain about their chances of finding better pay or improved working conditions elsewhere.
The Job Openings and Labor Turnover Summary (JOLTS) from the Labor Department highlighted that firms within the professional and business services sector — which encompasses a variety of roles, including managerial and technical positions — scaled back their job advertisements. Openings also decreased in sectors such as healthcare, social assistance, and finance, while there was a modest uptick in the arts, entertainment, and recreation sectors.
The U.S. labor market has certainly decelerated from the rapid hiring pace observed in 2021 through 2023. Between January and November 2024, employers added an average of 186,000 jobs per month, a decline from the 251,000 jobs added in 2023, 377,000 in 2022, and the peak of 604,000 in 2021. Analysts expect January’s jobs report, to be released on Friday, will reflect a slowdown in hiring, with estimates pointing to a drop to 160,000 from December’s 256,000, indicating a stable but not exceptionally robust job market. The unemployment rate is forecasted to maintain a low level of 4.1%.
Despite high interest rates, hiring has shown resilience. In a bid to mitigate inflation, the Federal Reserve raised its key interest rate 11 times throughout 2022 and 2023. Recent easing of price pressures has permitted the Fed to pivot and decrease rates three times in 2024. However, inflationary progress has stagnated in recent months, with year-over-year consumer price increases still surpassing the central bank’s 2% target.
Plans by President Donald Trump to impose import taxes and deport undocumented workers in the U.S. could potentially reignite inflation concerns. Consequently, the Federal Reserve has adopted a cautious stance, now projecting two rate cuts in the upcoming year, a reduction from the four it had envisioned in September.
According to Nancy Vanden Houten, the lead U.S. economist at Oxford Economics, the December JOLTS report aligns with the Fed’s assessment that the labor market is stable enough to allow for a more careful approach to reducing rates, particularly in light of uncertainties regarding tariff policies. She commented that the report illustrated a consistent narrative of the labor market, where a low rate of layoffs has kept net job growth positive, despite a slower hiring rate.
