A glimpse of the labor market at the start of the year reflected resilient trends. Job openings increased in January, layoffs declined, and the quits rate — a gauge of employees voluntarily resigning — climbed to the highest since July. Openings were driven by the financial sector, retail trade, and construction. However, the data trails behind recent reports of a labor market slowdown amid uncertainty about the effects of the Trump administration’s trade policy.
The bottom line for the January data on job openings and labor turnover (JOLTS) is that the numbers lag other reports related to the labor market. The effects of widespread layoffs in government were not yet evident in a meaningful way. Conditions remained consistent with mild expansion. I anticipate that will show cracks when the February numbers are reported.
Job openings were up 232,000 to 7.740 million in January after declining 107,000 to 7.508 million in December. The level is well below 8.468 million in January 2024. The job openings rate is up a tenth to 4.6 in January. Job openings were up 226,000 in private industry with two-thirds of these from a 149,000 increase in trade, transportation, and utilities. Professional and business services are down 122,000 in January. Government jobs were up 6,000 in January with a 3,000 decrease at the federal level and an increase of 9,000 at the state and local levels.
Hires were up a modest 19,000 to 5.393 million in January and the level has been little changed since October 2024. It is below the 5.572 million in January 2024. The hires rate is unchanged at 3.4 in January from December. New hires saw declines narrowly offset by increases. The gains of 32,000 in manufacturing 26,000 in construction, and 36,000 in professional and business services were the strongest sectors.
Separations were up 170,000 in January to 5.252 million after declining 203,000 in December to 5.082 million. Separations are below 5.429 million in January 2024. The separations rate is up a tenth to 3.3 in January but has been essentially unchanged for the past six months. Separations were up 192,000 in private industry with a 55.2% share from 106,000 in professional and business services. Separations in government were down 22,000 with state and local down 23,000.
The number of job quits – a subset of separations – was up 171,000 to 3.266 million in January and somewhat below 3.353 million in January 2024. This indicates the vast majority of job separations in January were due to voluntary job leavers. The quits rate is up two-tenths to 2.1 in January. In private industries, 53,000 quit as workers point to a competitive market for their skills and experience. Another 53,00 workers quit in trade, transportation, and utilities, and 30,000 quit in professional and business services. There was no change in the government sector between January and December.
The number of workers seeing layoffs and discharges – another subset of separations – was down 34,000 in January to 1.635 million in January from December and below 1.692 million in January a year ago. The rate for layoffs and discharges was 1.0 in January down a tenth from the prior month and the reading a year ago. Private industry job layoffs and discharges were down 13,000 in January from December and government were down 21,000.
January 2025 JOLTS update.
▪️ Job openings ticked up at the end of January: There were 7.7 million jobs available according to the latest Job Openings and Labor Turnover Survey (JOLTS). On a three-month moving average basis, job openings have held steady in a range between 7.4 to 7.8 million since June 2024.
▪️ The main takeaway from the annual revisions to the JOLTS data is that the labor market was cooler throughout 2024 than it appeared in real-time. Total job openings for the year were revised down by a cumulative -3.17 million, or -264,000 per month.
▪️ The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by Federal Reserve officials, remained flat at 1.1 for the fourth straight month. It is a touch below the pre-pandemic average.
▪️ The hiring rate has been at 3.4% on a three-month moving average basis for five straight months. The layoff rate remained at 1.1% on a three-month moving average basis for five straight months. In the aggregate, that has helped to offset low hiring. However, layoffs are up compared to a year earlier.
▪️ The JOLTS data in January 2025 should be viewed as a snapshot of the calm before the storm. Risks remain to the downside. The annual revisions showed that the labor market was weaker than it appeared in real-time. That is before the effects of the administration's new policies on layoffs, tariffs, and immigration have fed through the economy. A sharp downturn cannot be ruled out.