The significant drop in job openings in December extended the downward trend in labor demand toward normalization since the Federal Reserve’s rate hikes in 2022.
Job openings fell to 7.6 million from 8.2 million in November, near the pre-pandemic level and providing the Fed with more relief regarding wage pressure on inflation.
Alongside the vacancy-to-unemployed ratio, which settled at 1.1, the quit rate also remained at its pre-pandemic level, rising slightly, to 2.0. Both metrics have been key gauges for the Fed in assessing labor market tightness and wage inflation.
The data aligns with our payroll forecasts for this week, which point to a lower number of job gains—around 185,000—while the unemployment rate is expected to inch up slightly to 4.2%.
With most of the drop in job openings concentrated in the South and West regions, some of the recent strength in rehiring following the hurricanes should ease in January
We expect this gradual progress toward normalization to continue at least in the next couple of months, until an expected barrage of stimulative fiscal policies begins in the second half of the year.
Read more of RSM’s insights on the real economy.
Inside the data
Professional business and financial services registered the biggest drop in openings, with a decline of around 200,000 positions each.
Government vacancies remained strong, yet we expect this number to fall significantly this year because of the current effort of trimming federal jobs in the new administration.
Hirings grew in December, aligned with the job reports released in early January. Separations and quits picked up, but not too significantly.
