Job openings reported by the U.S. Bureau of Labor Statistics were revised upwards for December and remained sky-high in January, even as survey data on business hiring plans and active online job postings pointed to declining demand for labor. Directionally, however, the January JOLTS report pointed to a slowdown in the labor market, with job openings and quits declining, and layoffs rising.
Quits fell below 4 million for the first time in 20 months—a sign that U.S. workers are no longer finding as many superior alternatives to their current jobs. At the same time, layoffs and discharges rose by a whopping 16% overall, and by an even more staggering 37% in the South.
The increase in layoffs is noteworthy. The lowest number of layoffs and discharges in any month prior to the pandemic was 1.6 million. Since the pandemic recovery, however, layoffs and discharges have been in previously uncharted territory, hovering between around 1.2M and 1.5M every month since April 2021. The large increase to 1.7M this month brings layoffs and discharges closer to the pre-pandemic average of 1.9M and suggests that the period of unprecedented job security for American workers is coming to a close.
Job openings fell an eye-popping 49% in construction, dipping below their February 2020 pre-pandemic level. Construction is an industry with volatile employment, and a heightened sensitivity to interest rate hikes. So far, construction employment has been remarkably stable, even in the face of a housing market slowdown. That is largely because housing units have been under construction longer than usual since the pandemic due to supply chain disruptions and labor shortages.
Once construction firms make their way through the backlog of units under construction, however, employment in the industry could fall rapidly if residential building permit applications and new housing starts don’t soon recover. The higher interest rates rise, and the longer they remain elevated, the greater the risk of job losses in construction, as well as in other industries downstream of the housing market, like retailers and manufacturers of building materials and furniture.