Job openings declined more than analysts expected in December, hitting their lowest level since September as investors continued to watch closely for any signs of cooling in the labor market.
New data from the Bureau of Labor Statistics released Tuesday showed 7.6 million jobs were open at the end of December, a decrease from the 8.15 million in November. This marked the largest sequential drop in openings since October 2023.
The November figure was revised higher from the 8.01 million open jobs initially reported. Economists surveyed by Bloomberg had expected Tuesday's report to show 8 million openings in November.
Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients that December's data painted "a familiar picture of the labor market, with a low pace of layoffs keeping net job growth positive despite a slow pace of hiring."
The Job Openings and Labor Turnover Survey (JOLTS) also showed that 5.46 million hires were made during the month, up from the 5.37 million made during November. The hiring rate was flat at 3.4% for the third straight month. Also in Tuesday's report, the quits rate, a sign of confidence among workers, was 2% in December, unchanged from the month prior. Both the quits and hiring rates remain below their pre-pandemic levels.
In a press conference on Jan. 29, Fed Chair Jerome Powell described the labor market as "broadly stable," when explaining, in part, why the central bank paused cutting interest rates.
Vanden Houten believes the latest JOLTS report falls in line with how the Fed had assessed the labor market.
"The December JOLTS report is consistent with the Fed's view that the labor market is healthy enough to tolerate a more cautious approach to lowering rates, particularly given the uncertainty surrounding tariff policy," Vanden Houten wrote. "We will be removing a March rate cut from our February baseline forecast."
As of Tuesday morning, markets priced in a less than 50% chance the Fed cuts interest rates until at least its June meeting, per the CME FedWatch Tool.
Tuesday's data is the first of several key labor market reports investors will be tracking this week, capped off by Friday's January jobs report. Economists expect the report to show the US labor market added 170,000 jobs in the month, down from 256,000 in December. Meanwhile, the unemployment rate is anticipated to hold steady at 4.1%.
The report will also include revisions to labor data from the past year.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.