U.S. job openings increased at the beginning of the year, signaling that the job market remained strong when President Donald Trump returned to the White House.
According to the Labor Department’s report on Tuesday, U.S. employers listed 7.7 million job vacancies in January, up from 7.5 million the previous month. The future of the labor market, however, remains uncertain as Trump continues his trade war with foreign countries, reduces the federal workforce, and threatens to deport millions of immigrants.
In January, layoffs saw a slight decline, while the number of Americans voluntarily leaving their jobs rose.
The Labor Department’s Job Openings and Labor Turnover Survey revealed that job openings increased in sectors such as real estate, healthcare, manufacturing, and construction. Federal government agencies posted 135,000 jobs in January, a decrease from 138,000 in December. The effects of job cuts due to federal worker purges by billionaire Elon Musk’s Department of Government Efficiency are not expected to reflect in labor market data until the February figures are released.
Carol Weinberg and Mary Chen from High Frequency Economics wrote in a commentary, “The January data only reflects the initial days of DOGE-inspired layoffs of federal workers. There is no indication of federal government layoffs in this report. However, that doesn’t mean that significant layoffs in the federal workforce won’t be a prominent feature in the February report, which is scheduled for release on April 1.”
Weinberg and Chen noted that Tuesday’s JOLTS report is unlikely to influence the Federal Reserve’s cautious stance on interest rate cuts this year. The Fed is expected to keep its benchmark rate unchanged during next week’s meeting. “The data from today does not provide any reason for the Fed to rush into cutting rates,” they wrote. “The labor market doesn’t require it, at least not yet.”
Job openings have decreased from 8.5 million in January 2024 and from a peak of 12.2 million in March 2022, when the economy was recovering strongly from the COVID-19 lockdowns.
The American labor market has cooled from the intense hiring seen in 2021-2023. In 2024, employers added an average of 168,000 jobs per month, which is solid but lower than the 216,000 jobs added in 2023, 380,000 in 2022, and a record 603,000 in 2021.
In January, 125,000 new jobs were created, followed by 151,000 in February. The unemployment rate remains low at 4.1%.