The numbers: Job openings rose at the end of 2023 — topping 9 million for the first time in three months — suggesting the U.S. labor market is still quite sturdy and not softening quite as much as the Federal Reserve had hoped.
Job listings rose to 9 million in December from a revised 8.9 million in November, the Labor Department said Tuesday.
Many openings are never actually filled, but the trend in job postings gives clues on the health of the labor market and the broader economy.
Job openings have shrunk from a record 12 million in 2022, but they are higher compared to pre-pandemic days. And though hiring has slowed, many businesses continue to add workers.
Federal Reserve officials view a smaller number of openings as evidence that higher interest rates are slowing the economy and tempering inflation.
The number of people quitting jobs, meanwhile, fell again to 3.4 million and hit the lowest level in a few years.
Fewer people quitting jobs is also a sign of a softer labor market. Job quitters had climbed in late 2021 to a record 4.5 million before subsiding.
Key details: Most of the new job openings were in white-collar professional occupations. They also rose in manufacturing and health care.
New job listings declined in wholesale and transportation, as is often the case after the end of the holiday shopping season.
The number of job openings for each unemployed worker was unchanged at 1.4. The ratio is down from a peak of 2.0 in 2022 and almost back to a pre-pandemic norm of around 1.2 or so.
Fed officials had been watching the ratio closely as a gauge of labor-market strength.
The U.S. is forecast to add 185,000 new jobs in January. The jobs report comes out on Friday.
Big picture: The labor market has cooled off in the past year, but it’s by no means weak.
Layoffs are still near record lows, the unemployment rate is just 3.7% and the economy is adding close to 200,000 jobs a month.
The Fed would like to see the demand for labor soften a bit more, but with the economy perking up, it’s hard to see the jobs market losing much more momentum.
A sturdy or even strengthening labor market could even complicate the Fed’s decision on when to cut U.S. interest rates. Wall Street widely expects a rate cut by the spring or early summer.
Looking ahead: “The good news is that there are options out there if one is still unemployed or is looking for extra work,” said senior economist Jennifer Lee of BMO Capital Markets.
“The bad news is that it means that the consumer could spend more and that’s not what the Fed wants right now.”
Market reaction: The Dow Jones industrial average
DJIA
and S&P 500
SPX
fell in Tuesday trades. Stocks remain near record highs, however.
