Job Vacancies Rise, but Fewer Workers Quit, Suggesting Less Confidence in Labor Market

FILE PHOTO: A pedestrian passes a "Help Wanted" sign in the door of a hardware store in Cambridge, Massachusetts, U.S., July 8, 2022. REUTERS/Brian Snyder

U.S. job openings rose to a three-month high in December, but the number of employees quitting fell, suggesting that workers are growing less confident in their ability to find a better job and are staying put.

Job vacancies rose to roughly 9 million in December, an increase of around 100,000 compared to the prior month and the highest level in three months, the Labor Department’s Bureau of Labor Statistics said in its monthly Job Openings and Labor Turnover Survey (JOLTS) report.

December’s reading followed 8.9 million openings in November and came in above market expectations of around 8.75 million.

While job openings have fallen steadily from a March 2022 record peak of 12 million, they remain historically elevated, having never climbed above 7.6 million prior to the pandemic.

Quits Rate Suggests Caution

Some analysts saw the upside surprise in job vacancies as a positive sign for the economy.

“The latest news on job openings is better than expected, reflecting overall strength in the U.S. economy,” Bankrate senior economic analyst Mark Hamrick told The Epoch Times in an emailed statement.

Others were dismissive of the headline number, instead pointing to other data that point to some wobble in the labor market.

“Absolutely don’t care about the jump in JOLTS job openings. Noisy, often revised substantially, and not correlated with future payrolls. The low and falling quits rate, on the other hand ...“ Ian Shepherdson, chief economist at Pantheon Macroeconomics, stated in a post on X.

The JOLTS report showed that the number of layoffs increased in December, while the number of workers quitting their jobs fell to its lowest level in two years.

Analysts tend to see the quits rate as a barometer of positive worker sentiment regarding the labor market. When the number of quits goes down, it signals less confidence on the part of workers in being able to find a better paying job.

“Quits rate is the real job market strength indicator and it’s back below pre-covid levels,” wrote TheHappyHawaiian, a popular account on X that offers market analysis and economic indicator commentary.

Peter Berezin, chief global strategist and director of research at BCA Research, was dismissive of the headline job openings number.

“A small pop in the JOLTSs measure of job openings in December,” he wrote in post on X. “Too bad that the LinkUp measure, which tallies openings posted by 10,000 companies on their websites, showed no such improvement and continued to plunge in January.”

“The coyote has run off the cliff,” he added.

Clouds on the Horizon?

Despite signs of cooling, the labor market has remained surprisingly robust despite the Federal Reserve’s sharp interest-rate hikes that have squeezed credit supply and dampened consumer demand, and led to a slowdown in hiring.

Fed officials have signaled they expect to cut rates three times this year as inflation has fallen, though above-expectations job openings data weaken the case for rate cuts, at least in the near future.

“These data—which show demand for workers remains robust—do not support imminent rate cuts,'' Rubeela Farooqi, chief U.S. economist at High Frequency Economics, told The Associated Press.

“They support a cautious approach going forward, so that policymakers can be sure that inflation” will fall to around the Fed’s target of 2 percent.

Focus now turns to the January jobs report due to be released on Feb. 2, with expectations for a slowdown in hiring.

“For the January employment snapshot, the consensus is that we’ll see slower hiring, falling short of the 216,000 jobs added in December. A slight increase is expected in the nation’s unemployment rate from December’s 3.7 percent to 3.8 percent,” Mr. Hamrick told The Epoch Times.

The unemployment rate has remained below the 4 percent mark for 23 straight months now, the longest streak in over half a century.

But there’s anecdotal evidence in the form of layoff announcements that suggest clouds building on the horizon.

Job Cuts

The United Parcel Service (UPS) announced on Jan. 30 that the company is planning to slash 12,000 jobs.

The development comes after UPS reported a decline in the volume of packages being shipped, which came months after the company agreed with union representatives to boost drivers’ wages.

“In 2023, dynamic external and economic conditions led to lower volume and a more than $9 billion decline in revenue year over year,” Brian Hughes, UPS director of financial and strategy communications, told USA Today, confirming the figure.

The job cuts will save the firm about $1 billion, UPS CEO Carole Tome told reporters during an earnings call.

The UPS managers did not say what positions would be eliminated.

Earlier, Citigroup said it would slash 20,000 jobs, or 10 percent of its workforce, by the end of 2026, following its worst quarterly financial results in more than a decade.

Citi reported $1.8 billion net loss in the fourth quarter of 2023, according to its latest financial filings. The bank expects the layoff to save as much as $2.5 billion over the long term.

The reductions are part of a reorganization effort announced last year to cut bureaucracy, increase profits, and improve the company’s stock price.

Jack Phillips and Jane Nguyen contributed to this report.