Despite the looming threat of recession and the cacophony of mass layoff announcements, American businesses still need workers – 11.01 million of them.
The number of job vacancies rose unexpectedly in December, rising from a revised 10.44 million openings in November and beating economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released Wednesday. The 11 million openings for December are the highest since July.
The largest increases in vacancies were in accommodation and food services, which rose by 409,000; retail, up 134,000; and construction, up 82,000, according to the BLS report.
The latest Job Openings and Labor Turnover Survey, or JOLTS, showed the job market that entered 2022 on fire ended the year again on a soft note: there were 1 .9 job available for each person who was looking for one.
“The labor market continues to defy experts’ recession forecasts,” Christopher Rupkey, chief economist at FwdBonds, said in a statement. “This could well be the first recession in history without significant job losses, even as production and consumer spending upset economic growth.”
The December JOLTS report showed that job hiring rose to 6.17 million compared to 6.03 million in November, according to the report. Layoffs rose to 1.47 million from 1.41 million in November, and the number of people leaving jobs fell to 4.09 million from 4.1 million.
The Federal Reserve has sought a tighter labor market to help support rate hike efforts aimed at keeping inflation in check. Although Fed officials noted that wages do not appear to be driving inflation, they expressed concern that a tight labor market and the imbalance between supply and demand for workers could lead to higher wages and therefore higher prices.
Within the labor market, there’s a bifurcation happening in terms of people’s experiences, said John Leer, chief economist for global business intelligence firm Morning Consult.
“For people who are working and have a job, they know they’re in demand and they’re trying to do whatever they can to get a slightly better paying job,” including quitting, he said. . “But for people who are out of the labor market and not working or looking for work, they are really disappointed, even if the wage growth is as high as it is. They have no incentive to come back and start working.
The latest batch of earnings data caps off what has been a historic year in the labor market, said Julia Pollak, chief economist at ZipRecruiter.
Records set in 2022 include most complete hires (76.4 million), most quits (50 million), lowest layoffs and dismissals (16.8 million) and most turnovers (70%) , compared to 53% before the pandemic). at Pollak.
Still, there may be something more to the opening December issue than meets the eye, she added.
The increase is “somewhat surprising” and contrasts with Federal Reserve data on corporate hiring plans and other leading indicators, she noted.
“We believe that the current number of job openings, as measured by the Bureau of Labor Statistics, definitely overestimates the current strength and tightness of the labor market,” Pollak said in a statement. “Online hiring and job postings have undergone a slow renormalization in recent months that is not yet reflected in job postings.”
The extent and speed with which the labor market cools could very well depend on consumer activity, Leer said.
In recent months, consumers have cut spending and reported increased stress in their finances, including spending more money than they bring in, Leer told CNN Business.
“We’re also starting to see companies feeling the pressure of high interest rates, tighter financing terms and potentially weaker consumer demands, causing them to scale back some of their hiring plans,” he said. he declares. “So when you put those things together, I think it’s increasingly likely that labor demand will slow down quite dramatically in the first quarter.”
“In the second quarter, I think that’s when we’re more likely than not to see a pullback and a contraction in job growth,” he added.
There are some signs that a downturn has already begun. As of Jan. 27, job postings on Indeed were down 4% from the previous month, said Nick Bunker, director of economic research for North America at Indeed Hiring Lab.
“Obviously expecting more data on that front, but it looks like there is some moderation in demand at least so far. [in 2023]“, he said in an interview with CNN.
A significant chunk of that data will come out on Friday when the BLS releases its jobs report for January.