US Job Market Adjusts as More Workers Settle Into Current Jobs

Job Openings Dip Slightly

In January, there was a marginal decrease in job opportunities in the United States, while the number of people leaving their jobs plummeted to its lowest level in three years. This suggests that the labor market is gradually stabilizing.

The decrease in job departures, which consequently led to the resignation rate hitting its lowest point in three and a half years, has implications for slower wage inflation and wider economic inflation over time.

Labor Market Remains Strong

For every individual out of work in January, there were 1.45 jobs available, showing an increase from 1.42 in December. This is significantly more than the pre-COVID-19 yearly average of 1.2, indicating a hardy labor market.

Federal Reserve Anticipates Wage Inflation Slowdown

The Job Openings and Labor Turnover Survey (JOLTS) release coincided with Federal Reserve Chair Jerome Powell's presentation of the central bank's mid-year Monetary Policy Report to Congress. According to Powell, despite a temporary lack of a rate cut timeline, the expectation is a decrease in inflation and sustained economic growth.

Industry Specific Job Fluctuations

According to the data, it's evident fewer people are actively seeking employment. In certain industries, such as manufacturing, financial activities, professional and business services, and leisure and hospitality, job openings are increasing. Conversely, government and private educational services, the retail, transportation, warehousing and utilities sectors, have seen a decrease in job openings.

Audit of Resignations Reflects Economic Confidence

The drop in workers seeking better opportunities was greatest since January 2021, which likely contributed to wage inflation cooling down. In February, the ADP National Employment report revealed a 5.1% increase in salaries for individuals who remained in their current jobs - the smallest annual rise since August 2021.

Job Growth Remains Steady Despite Economic Shifts

Although job growth has slowed compared to 2022's brisk pace, the creation of payrolls remains well above the around 100,000 jobs per month required to maintain pace with the growth of the working-age population.