Job Openings Fell to 10.8 Million in January
The U.S. Bureau of Labor Statistics (BLS) recently released its January Job Openings and Labor Turnover Summary. This month’s report showed the number of job openings decreased from an upwardly revised 11.2 million in December to 10.8 million in January, representing a 410,000 decline from last month. The job openings rate also dropped from 6.7% in December to 6.5% in January.
Despite January’s drop in job openings, the number remains high—well above pre-pandemic levels—and likely not decreasing as quickly as the Federal Reserve (Fed) would like. The number of job openings is viewed as an indication of the strength of the labor market and the broader economy. The Fed wants labor demand to drop faster to reduce the upward pressure on wages that is contributing to high inflation. The largest decreases in job openings were in the construction, accommodation and food services, and finance and insurance industries, while the number of job openings increased in the transportation, warehousing and utilities sector.
The number of total employee quits fell slightly from 4.1 million in December to 3.9 million in January, the lowest number since May 2021. Because employee quits are generally voluntary separations initiated by the employee, the quit rate serves as a measure of workers’ willingness to or ability to leave jobs. January’s rate of employee quits was little changed at 2.5%, decreasing December’s rate of 2.7%. The number of employee quits fell in professional and business services, educational services and federal government.
Total separations held steady at 5.9 million, and the rate was unchanged at 3.8%. The number and rates of layoffs and discharges increased from December’s 1.5 million and 1.0%, respectively, to 1.7 million and 1.1% in January. This is the most layoffs since December 2020 and raises questions about whether U.S. economy is heading toward a recession, as many economists predict. Industries such as professional and business services saw an increase in layoffs and discharges. Further, the total number and rate of hires increased slightly from December’s 6.2 million and 4.0%, respectively, to 6.4 million and 4.1% in January. However, hires changed little in all industries.
Employer Takeaways
January’s report suggests that as the number of layoffs increase, there are fewer job openings and fewer employees are quitting. These are possible signs that the labor market is cooling, but likely not as fast as the Fed would like. In spite of January’s drop in job openings, the labor market remains unexpectedly strong. Experts would have viewed a larger decrease in job openings as evidence of a meaningful slowdown in the job market despite the 517,000 jobs added in January.
Employers will likely continue to have difficulties attracting and retaining workers, resulting in increased labor costs as they raise wages and offer competitive benefits to attract talent. Employers should continue to monitor employment trends to stay competitive in today’s evolving market.
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