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U.S. job openings dropped by the most in 14 months in December, but steady hiring and low layoffs suggested that the labor market was not abruptly slowing down and probably keep the Federal Reserve on the sidelines at least until 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.”
“Labor demand is softening but not collapsing,” said Eugenio Aleman, chief economist at Raymond James.
Job openings, a measure of labor demand, decreased 556,000 to 7.6 million on 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.
Some economists viewed jobs openings as too volatile to offer a good signal on the labor market.
The decline in job openings was led by professional and business services, with 225,000 fewer positions.
Vacancies fell 180,000 in healthcare and social assistance, while there were 136,000 fewer open positions in the finance and insurance industry. But arts, entertainment and recreation had 65,000 more unfilled positions. The job openings rate dropped to 4.5% from 4.9% in November.
Layoffs fell 29,000 to 1.771 million as increases in transportation, warehousing and utilities as well as mining and logging were more than offset by decreases in professional and business services. There were also fewer leisure and hospitality layoffs.
The layoffs rate was unchanged at 1.1% for a fourth straight month. It is, however, becoming harder for laid-off workers to find new jobs as employers remain cautious about adding 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 hire rate was unchanged at 3.4% for the third consecutive month.
The U.S. central bank left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range last week amid uncertainty over the economic impact of President Donald Trump’s fiscal, trade and immigration policies.
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.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
