The labor market in the US seems to have stabilized somewhat, as JOLTS job openings data for January showed signs of strength. While the job market has shown resilience, recent data indicated both positive signs and growing concerns that could shape the labor market in the US and influence the Fed’s next decision on interest rates.
Jobs Openings Beat Expectations, But There are Signs of Cooling
Job openings in January increased to 7.74 million, which was higher than expected and higher than the December report, which came in at 7.5 million. This increase shows a continued demand for workers in the US. ⁽¹⁾
Hiring rose to 5.4 million in January, and the number of workers who quit for better opportunities reached 3.27 million, indicating workers are still confident in finding new jobs. Layoffs fell to 1.6 million, close to historic lows. ⁽²⁾
Source: Trading Economics │ US Bureau of Labor Statistics
Even though the job market remains resilient, the chart above indicates that job openings seem to be slowing from 2024 till now as macroeconomic pressures linger.
Growing Concerns on Job Security and Growth
While hiring remains stable, Americans are showing concern over job security, as fears of rising layoffs, high inflation, and monetary policy changes continue to insert doubt in the labor market. ⁽³⁾
Markets also aren’t ruling out the possibility of recession due to President Trump’s tariffs that have fueled uncertainty and reduced consumer and business confidence, causing big selloffs in stocks and raising fears of job losses.
Some of Trump’s other policies, such as laying off federal workers and tightening immigration could also affect the labor market. ⁽⁴⁾
How Did the Markets React?
The JOLTS job opening data provided some positive news for the labor market, despite underlying signs of softening. Nonfarm Payrolls in February came in slightly below market expectations at 151K. The unemployment rate also ticked up higher at 4.1% for the same period. ⁽⁵⁾
Stocks reacted negatively to both news, overshadowed by President Trump’s tariffs. The USD rose against the Yen and the Canadian Dollar but consolidated against the Euro and Pound as other factors, such as the Ukraine ceasefire deal, took the market’s focus. ⁽⁶⁾
The Federal Reserve considers the JOLTS report an important indicator of labor market strength. The central bank is expected to hold rates still next week during its meeting on Wednesday, March 19, where focus will most likely be on inflation and the impact of Trump’s policies. ⁽⁷⁾
