U.S. labour market data released in recent weeks has shown a steady weakening in hiring demand, even as overall economic output has remained firm. Government reports and private surveys indicate that employers are advertising fewer vacant positions, announcing more job cuts, and slowing recruitment plans. The latest figures from the Labor Department place job openings at their lowest level since 2020, reinforcing a broader pattern of restraint across several major industries. These developments have arrived amid steady economic growth, a pause in interest rate changes by the Federal Reserve, and ongoing uncertainty linked to trade policy, automation, and corporate cost control.
According to data released by the Bureau of Labor Statistics, job openings declined sharply in December to about 6.54 million. This marked a monthly drop of nearly 400,000 openings and placed vacancies more than 900,000 below their October level. The reading was the lowest recorded since September 2020, a period marked by pandemic-related shutdowns and labour disruptions. Economists surveyed ahead of the release had expected a higher figure, making the decline larger than anticipated. The data forms part of the Job Openings and Labor Turnover Survey, known as JOLTS, which is closely monitored by policymakers and markets.
The decline in vacancies suggests that firms are taking a cautious approach to workforce planning. While job openings remain above levels seen before the pandemic, the pace of reduction over recent months has raised concerns about the strength of hiring demand. In December, there were fewer available jobs than unemployed workers, with the ratio falling to about 0.87 openings per job seeker. At its peak in mid-2022, that ratio stood at more than two openings per unemployed person, underscoring the extent of the shift.
The slowdown in job openings contrasts with continued economic expansion. Gross domestic product grew at its fastest pace in two years during the third quarter, driven by consumer spending, business investment, and government outlays. Despite that output growth, hiring has remained weak. Employers have added an average of about 28,000 jobs per month since March, far below the pace seen during the post-pandemic hiring surge of 2021 through 2023, when monthly gains often exceeded 400,000.
Sector-level data shows that the reduction in job openings has not been evenly distributed. Professional and business services accounted for a large share of the December decline, with vacancies in that sector falling by more than 250,000. Retail trade openings also dropped sharply, down nearly 200,000. Other sectors reporting fewer vacancies included financial activities, healthcare and social assistance, and arts and recreation. Economists have linked the pullback in professional services hiring to corporate reassessments of staffing needs, with some firms citing automation and software adoption as reasons for pausing recruitment.
US job openings are now at recession levels:
US job openings dropped -386,000 in December, to 6.5 million, the lowest since September 2020.
Over the last 2 months, job openings have declined -907,000, the biggest 2-month drop since March 2023.
The number of available vacancies… pic.twitter.com/iw1IUlVljS
— The Kobeissi Letter (@KobeissiLetter) February 8, 2026
Hiring activity showed only limited improvement. Total hires rose by about 170,000 in December, reaching just over 5.29 million. Gains were recorded in healthcare, social assistance, accommodation, and food services. Hiring in professional and business services fell during the same period, offsetting increases elsewhere. The overall hires rate edged up slightly to 3.3 percent from 3.2 percent in November, remaining low by historical standards.
Measures of worker confidence have also remained subdued. The number of people voluntarily leaving their jobs, known as quits, was largely unchanged at about 3.2 million in December. The quits rate held near 2.0 percent, close to its lowest level since the pandemic. Economists view quits as an indicator of worker confidence, since employees are more likely to resign when they believe new opportunities are available. The stable but low level of quits suggests that many workers are choosing to remain in their current roles amid uncertainty.
Layoffs edged higher in December but stayed within a narrow range. The layoffs rate remained at about 1.1 percent, a level that points to stability rather than widespread job losses. Official government data has yet to show a sharp increase in separations, even as some large employers have announced workforce reductions. The limited rise in layoffs has helped keep overall unemployment claims relatively low, despite recent volatility linked to weather and seasonal factors.
Private-sector data has shown similar trends. ADP reported that private employers added only 22,000 jobs in January, well below expectations. This followed several months of subdued hiring growth and reinforced the view that firms are proceeding carefully. ADP officials noted that hiring gains were concentrated in a small number of sectors, while many industries showed little change or declines.
Separate figures from Challenger, Gray & Christmas showed a marked increase in announced job cuts at the start of the year. U.S. employers announced more than 108,000 layoffs in January, more than double the level recorded a year earlier and the highest January total since 2009. At the same time, planned hiring announcements fell to their lowest January level since the firm began tracking the data. Challenger representatives said many of the layoff plans were set late in the previous year, pointing to concerns about economic conditions and cost pressures.
High-profile layoff announcements have added to public attention around labour conditions. Amazon, UPS, and Dow Inc. have all disclosed plans to reduce headcount. Transportation and warehousing accounted for a large share of announced cuts in January, largely due to UPS plans to eliminate tens of thousands of positions. Technology firms also reported job reductions, with Amazon citing restructuring of corporate roles.
Jobless claims data has shown short-term increases but limited change in underlying trends. Initial claims for unemployment benefits rose to about 231,000 for the week ending January 31, the highest level since early December. Economists attributed part of the increase to winter storms that disrupted business activity across several states. Continuing claims, which track the number of people receiving benefits beyond an initial week, rose modestly to about 1.84 million after several weeks of declines.
Consumer surveys have pointed to growing concern about job availability. Data from the Conference Board showed that the share of consumers who said jobs were hard to get rose to its highest level since early 2021. These perceptions align with the decline in job openings and limited hiring momentum. At the same time, wage growth has moderated, supporting the Federal Reserve’s assessment that labour costs are not driving inflation pressures at present.
Federal Reserve officials have described the labour market as stable but subdued. At its January meeting, the central bank left interest rates unchanged in the range of 3.50 to 3.75 percent. Chair Jerome Powell said recent data pointed to stabilisation in employment conditions. Policymakers have signalled that a sharper weakening in hiring or a rise in unemployment could influence future rate decisions, while steady conditions could support a longer pause.
Market reactions to the recent labour data have been mixed. Following the release of job openings and claims figures, U.S. stock markets traded lower, Treasury yields declined, and the dollar strengthened against several major currencies. Investors interpreted the data as reinforcing expectations that the Federal Reserve will maintain a cautious stance on interest rates while monitoring employment trends.
Some economists have raised questions about the reliability of certain labour indicators. The JOLTS survey has faced criticism due to its response rate and periodic revisions. A separate index maintained by job-posting site Indeed showed a modest rise in postings during December, diverging from the government data. Analysts caution that differences in methodology can lead to varying results across data sources.
Even with these limitations, the overall pattern points to slower labour demand. Employers appear to be adjusting staffing plans after the rapid expansion seen earlier in the decade. While economic output has remained solid, firms have shown restraint in adding workers, focusing on cost management and productivity improvements. The balance between job openings and available workers has shifted toward equilibrium after an extended period of labour shortages.
