Despite the looming recession and the cacophony of mass layoff announcements, American companies still need workers — 11.01 million of them.
The number of available jobs rose unexpectedly in December, following a revised 10.44 million job openings in November and exceeding economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released Wednesday. The 11 million openings for December is the highest since July.
The largest increase in job vacancies was in the accommodation and hospitality sector, with an increase of 409,000; retail, up 134,000; and construction, up from 82,000, according to the BLS report.
The latest Job Openings and Labor Turnover Survey, or JOLTS, showed that the job market going into 2022 red hot had still ended the year on a sultry note: there were 1.9 available jobs for every person looking for them.
“The labor market continues to defy experts’ recession forecasts,” said Christopher Rupkey, chief economist at FwdBonds, in a statement. “This could be the first recession in history without material job losses, even as manufacturing and consumer spending turn economic growth upside down.”
The December JOLTS report found that job hiring rose to 6.17 million up from 6.03 million in November, according to the report. The number of layoffs rose from 1.41 million in November to 1.47 million, and the number of people who left their jobs fell from 4.1 million to 4.09 million.
The Federal Reserve is looking for a tighter labor market to support rate hikes to curb inflation. While Fed officials have noted that wages do not appear to be driving inflation, they have expressed concern that a tight labor market and the imbalance between the supply and demand of workers could cause wages to rise, and thus prices to rise.
Within the job market, there is a split in people’s experiences, said John Leer, chief economist at global decision-making firm Morning Consult.
“For people who work and have a job, they know it’s in demand, and they’re trying to do everything they can to get a slightly better paying job,” he said, including quitting. “But for people who are outside the labor market and not working or not looking for work, they are really disillusioned, despite the high wage growth. They are not tempted to come back in and go to work.”
The latest set of revenue data tops a historic year in the labor market, said Julia Pollak, chief economist at ZipRecruiter.
The records set in 2022 include most hires completed (76.4 million), most layoffs (50 million), fewest layoffs and layoffs (16.8 million), and most employee-induced turnover (70%, an increase from pre-pandemic 53%), according to Pollak.
Still, there may be a little more than meets the eye in December’s opening issue, she added.
The increase is “somewhat puzzling” and contrasts with the Federal Reserve’s 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, vastly overstates the current strength and tightness in the labor market,” Pollak said in a statement. “Hiring and online job postings have undergone a slow renormalization in recent months that is not yet reflected in job postings.”
How much and how quickly the job market cools may well depend on consumer activity, Leer said.
In recent months, consumers have reduced their spending and reported more stress in their finances, including spending more than they brought in, Leer told CNN Business.
“We’re starting to see companies also feeling the pressure of increased interest rates, tighter financing conditions and potentially weaker consumer demands, forcing them to scale back some of their hiring plans,” he said. “So when you add 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 we’re more likely than not to see an outright pullback and a contraction in job growth,” he added.
There are some indications that a delay has already begun. As of Jan. 27, job postings on Indeed were 4% lower than a month earlier, said Nick Bunker, economic research director for North America at Indeed Hiring Lab.
“Obviously waiting for more data on that front, but it looks like there is a moderation in demand so far. [in 2023]”, he said in an interview with CNN.
A significant portion of that data will appear Friday when the BLS releases its January jobs report.