Despite the looming threat of a recession and the cacophony of announcements of mass layoffs, American businesses still need workers—11.01 million of them.
The number of jobs available unexpectedly rose in December, rising from a revised 10.44 million jobs in November and beating economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released on Wednesday. December’s 11 million opens were the highest since July.
The largest increase in job openings was in lodging and food services, which increased by 409,000; retail trade, up to 134,000; and construction, up 82,000, according to the BLS report.
The latest Job Vacancy and Labor Turnover Survey, or JOLTS, showed that the job market, which entered 2022 red-hot, ended the year still soft: There were 1.9 job openings for every person looking.
“The labor market continues to defy experts’ recession forecasts,” Christopher Rupkey, chief economist at FwdBonds, said in a statement. “This could be the first recession in history without significant job losses, even with manufacturing and consumer spending turning economic growth upside down.”
The December JOLTS report showed that job hiring increased to 6.17 million from 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 who left their jobs fell to 4.09 million from 4.1 million.
The Federal Reserve is looking to a tighter labor market to aid efforts to raise interest rates to tame inflation. Although Fed officials noted that wages do not appear to be driving inflation, they expressed concern that a tight labor market and an imbalance between the supply and demand for workers could lead to higher wages and, in turn, higher prices.
Within the labor market, there’s a bifurcation that’s happening in terms of people’s experience, said John Lear, chief economist at global solutions intelligence firm Morning Consult.
“People who are working and have jobs know they’re in demand, and they’re trying to do whatever they can to find a slightly better-paying job,” including quitting their jobs, he said. “But for people who are out of the labor market and not working or looking for work, they’re really disappointed, even though wage growth is as high as it is. They’re not enticed to come back and start working.”
The latest set of turnover data caps what has been a historic year in the labor market, said Julia Pollack, chief economist at ZipRecruiter.
Records set in 2022 include the most completed hires (76.4 million), the most departures (50 million), the fewest firings and layoffs (16.8 million), and the most turnover, led by employees (70%, up from 53%) before the pandemic, according to Pollack.
Still, there may be more to it than what is seen in December’s number of openings, she added.
The increase was “somewhat puzzling” and contrasted with Federal Reserve data on business hiring plans and other leading indicators, she noted.
“It is our belief that the current number of job openings as measured by the Bureau of Labor Statistics significantly overstates the current strength and strain in the labor market,” Pollack said in a statement. “Hiring and online job postings have seen a slow renormalization in recent months, which has yet to be reflected in job openings.”
How much, and how quickly, the job market cools may depend a lot on consumer activity, Leer said.
In recent months, consumers have cut back on spending and reported increased stress on their finances, including spending more money than they brought in, Lehr told CNN Business.
“We are also starting to see businesses feel the pressure of higher interest rates, tighter financing conditions and potentially weaker consumer demand, causing them to scale back some of their hiring plans,” he said. “So when you put those things together, my view is increasingly likely that labor demand will slow quite dramatically in the first quarter.”
“I think in the second quarter we’re more likely to see an outright pullback and contraction in job growth,” he added.
There are some signs that a slowdown has already begun. As of Jan. 27, job postings on Indeed were down 4 percent from the previous month, said Nick Bunker, director of economic research for North America at Indeed Hiring Lab.
“Obviously wait for more data on that front, but there seems to be moderate demand at least so far.” [in 2023]” he said in an interview with CNN.
Much of that data will come out on Friday when the BLS releases its January jobs report.