US job openings decline to lowest since October 2023 at 7.6 mn

US job openings fell by the most in 14 months in December, but steady hiring and low layoffs suggested the labor market was not abruptly slowing down and that the Federal Reserve probably can hold off on cutting interest rates until at least June.

The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday showed there were 1.1 job openings for every unemployed person, down from 1.15 in November. Fed Chair Jerome Powell told reporters last week, “We do not need to be in a hurry to adjust our policy stance.”

“Fed officials are likely to judge this report as suggesting that the labor market has cooled from a previously overheated state, but that job demand remains solid relative to the available supply of workers,” said Conrad DeQuadros, senior economic advisor at Brean Capital.

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Job openings, a measure of labor demand, had decreased 556,000 to 7.6 million by the last day of December, the Labor Department’s Bureau of Labor Statistics said. The decline was the largest since October 2023.

Data for November was revised higher to show 8.156 million vacancies instead of the previously reported 8.098 million. Economists polled by Reuters had forecast 8.0 million unfilled positions. Vacancies were down 1.3 million over the year. They remain above the 2019 average.

The decline in job openings was led by the professional and business services category, with 225,000 fewer positions.

Healthcare and social assistance vacancies fell by 180,000, while there were 136,000 fewer open positions in the finance and insurance industry. But the arts, entertainment and recreation category had 65,000 more unfilled positions. The job openings rate dropped to 4.5% from 4.9% in November.

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Businesses with 10 to 49 employees had the biggest drop in vacancies, followed by enterprises with 50 to 249 workers.

The drop in job openings suggested there was no boost from President Donald Trump’s Nov. 5 election victory, which saw business sentiment soaring on hopes for tax cuts and a less stringent regulatory environment. Uncertainty about the new administration’s policies, including broad tariffs on goods from key trading partners and mass deportations of undocumented migrants, may have made businesses cautious.

Policymakers are also adopting caution as many economists view the policies as inflationary. The U.S. central bank left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range last week. The policy rate has been reduced by 100 basis points since September when the U.S. central bank started its easing policy cycle. The Fed hiked the policy rate by 5.25 percentage points in 2022 and 2023 to tame inflation.

Financial markets do not expect a rate cut before June. Stocks on Wall Street were trading higher after being rattled by Trump’s announcement over the weekend of tariffs on Canada, Mexico and China. The dollar slipped against a basket of currencies. Prices of U.S. Treasuries rose.

Trump on Monday suspended a 25% tariff on Canadian and Mexican imports until next month. An additional 10% levy on Chinese goods went into effect on Tuesday. Tariffs could jeopardize a nascent recovery in U.S. manufacturing.

Data from the Commerce Department’s Census Bureau on Tuesday showed factory orders tumbled in December on a sharp drop in civilian aircraft orders. But orders excluding transportation rose.

The JOLTS report showed layoffs fell 29,000 to 1.771 million amid increases in transportation, warehousing and utilities as well as mining and logging, which were more than offset by a decrease in professional and business services. There were also fewer leisure and hospitality layoffs.

The layoffs rate was 1.1% for a fourth straight month. It is, however, becoming harder for laid-off workers to find new jobs as employers remain hesitant to add headcount. Hires increased 89,000 to 5.462 million.

They were, however, down 325,000 over the year. The increase in December was mostly in finance and retail sectors. The hires rate was unchanged at 3.4% for the third consecutive month.

Hiring was lifted by businesses with 10 to 49 employees. It was weak among medium-sized and large companies.

With the labor market cooling, job-hopping is becoming less of a trend. The number of people voluntarily quitting their jobs rose by only 67,000 to 3.197 million, keeping the quits rate at 2.0%. The quits rate is viewed as a measure of labor market confidence, and the steady reading points to low wage inflation.

“While the Fed is no longer focused on wage growth as a source of inflationary pressures given recent productivity growth, easing wage growth is still welcome,” said Nancy Vanden Houten, lead economist at Oxford Economics.