The US labor market has slowed down, with a significant drop in job openings in December, according to the Labor Department. The number of open positions fell by more than half a million compared to November and is now lower than last year’s level by 1.3 million.
The decline was particularly noticeable in the professional and business services sector, which saw a decrease of 225,000 jobs, followed by health care and social assistance with an additional 180,000 fewer positions available. Finance and insurance also experienced job losses, with a drop of 136,000 positions.
On the other hand, arts, entertainment, and recreation saw a slight increase in open positions, with 65,000 new jobs added. Economists attribute this to the ongoing recovery from the COVID-19 pandemic’s disruptions.
The Labor Department will release its monthly jobs report on Friday, with expectations of around 170,000 jobs being added. However, some economists caution that this number may be affected by annual seasonal revisions and other factors.
Notably, the Federal Reserve is keeping a close eye on the labor market for signs of a slowdown. They have expressed concerns over the impact of President Trump’s tariffs and tax proposals on the economy. According to senior economist Lydia Boussour at EY, a strong January employment report would likely reduce the odds of an interest rate cut in March, while a softer reading could keep it on the table due to anticipated lower inflation.
In summary, the US labor market is rebalancing as the pandemic’s disruptions dissipate, with job openings decreasing across various sectors. However, economists expect demand for new workers to remain tepid, but tentative signs of stabilization suggest that the unemployment rate might stay below 4% this year.
Source: https://www.usnews.com/news/economy/articles/2025-02-04/job-openings-fall-sharply-as-labor-market-cools