Job Openings Decline in December, Continuing Downward Trend – Robert Hughes (02/14/2020)

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the number of open positions in the private sector fell to 5.739 million in December (see top chart). Total job openings dropped to 6.423 million. Private-sector openings are down in eight of the past thirteen months since the peak in November 2018, a drop of 1.223 million or 17.6 percent.

The private-sector job-openings rate, openings divided by the sum of jobs and openings, was 4.2 percent, down from 4.5 percent last month and a peak of 5.2 percent in November (see top chart). These results are before the strong job gains for January reported by the Bureau of Labor Statistics on Friday February 7. Though the level of openings remains high by historical comparison and the labor market remains very tight, the downward trend in job openings suggests some pressures in the labor market may be easing slightly.

The industries with the largest number of openings were professional and business services (1.18 million), health care (1.09 million), leisure and hospitality (969,000), and retail (698,000). The highest openings rates were in leisure and hospitality (5.4 percent), professional and business services (5.2 percent), and health care (5.0 percent).

While private-sector openings declined, private-sector layoffs rose in the latest month. Layoffs rose slightly to 1.82 million from 1.67 million in the prior month. The layoffs rate ticked up to 1.4 percent. Though slightly above the all-time low of 1.2 percent, it is well below the 2.3 percent peak rate in 2009. The low layoffs rate is consistent with the multidecade-low level of initial claims for unemployment insurance.

Quits by private-sector employees ticked down in December, dropping to 3.30 million from 3.38 million in November (see bottom chart). The quits rate also ticked down, falling to 2.5 percent from 2.6 percent last month and just below the record high of 2.8 percent from 2001 (see bottom chart).

Overall, the data relating to the labor market are still relatively strong by historical comparison, but job openings have shown significant deterioration in recent months. The weakness may be a sign that employers are getting a bit more cautious. Still, attracting and retaining qualified labor is likely to remain a critical issue for business for the medium term.

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