U.S. Job Openings Slide to Five-Year Low as Hiring Remains Tepid Despite Solid Economic Growth

By Anietie anii-bassey

Job openings across the United States fell in December to their lowest level in more than five years, underscoring continuing weakness in the labor market even as broader economic growth remains robust.

The Labor Department reported Thursday that available positions declined to 6.5 million, down from 6.9 million in November and the smallest total since September 2020, when the economy was still reeling from the early months of the pandemic.

Layoffs edged slightly higher during the month, while the number of workers voluntarily leaving their jobs — a key indicator of confidence in finding new employment — held steady at 3.2 million. Economists had expected a higher level of vacancies, making the latest figures another disappointment for those hoping to see a rebound in hiring demand.

The data highlight a growing disconnect in the U.S. economy. Output has been expanding at a healthy clip, with gross domestic product accelerating in the third quarter at its fastest pace in two years as consumers continued to spend and businesses invested.

Yet the labor market has failed to keep pace. Since March, employers have added an average of only 28,000 jobs per month, a sharp slowdown from the torrid hiring period that followed the COVID-19 lockdowns, when companies routinely created roughly 400,000 jobs a month between 2021 and 2023.

Attention is now turning to the government’s upcoming employment report for January, scheduled for release next Wednesday. Economists surveyed ahead of the report expect that businesses, government agencies and nonprofit organizations added about 70,000 jobs last month — a modest improvement from December’s estimated 50,000 but still far below levels associated with a vigorous labor market.

Other recent indicators have painted a similarly subdued picture. Payroll processor ADP said Wednesday that private-sector employers added just 22,000 positions last month, well under analysts’ expectations.

Separately, the outplacement firm Challenger, Gray & Christmas reported Thursday that companies announced more than 108,000 job cuts, the largest monthly total since October and the steepest January for layoffs since the depths of the Great Recession in 2009.

Some economists argue the latest readings suggest the slowdown in hiring may persist. Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary that the weakness shows little sign of abating. “The hiring recession isn’t going to end anytime soon,” she said, pointing to December’s plunge in vacancies as further evidence that employers remain reluctant to expand payrolls.

At the same time, forecasters are wrestling with what the diverging signals mean for the outlook. One possibility is that hiring could eventually accelerate to match the economy’s underlying strength. Another is that growth will cool as a softer labor market weighs on household income and consumer spending.

A third scenario reflects deeper structural change: advances in artificial intelligence, automation and productivity-enhancing technologies may be allowing companies to boost output without adding many workers, potentially reshaping the relationship between growth and employment.

For now, the latest report reinforces the sense that the U.S. labor market is losing momentum, even as the economy continues to defy predictions of an imminent slowdown.