Jan US job openings rose, indicating steady demand for workers amid DOGE cuts

Job openings in the United States rose in January to service a steady demand for workers even as federal layoffs tied to the Department of Government Efficiency (DOGE) are expected to take effect in the coming months.

According to data from the Bureau of Labor Statistics released Tuesday, available positions climbed to 7.74 million from a revised 7.51 million in December. The figure exceeded economists’ median estimate of 7.6 million, demonstrating the US job economy’s resilience. 

The report, part of the Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS), also showed that layoffs declined slightly while the number of Americans voluntarily quitting their jobs increased.

Federal workforce cuts yet to affect job market 

Job openings rose across multiple sectors, including real estate, healthcare, manufacturing, and construction. Yet, federal government job postings fell to 135,000 from 138,000 in December, a decline likely coming from the effects of cuts ordered by billionaire Elon Musk, under the authority of US President Donald Trump.

The agency, established under President Donald Trump’s administration, has its sights focused on reducing federal employment. But its impact on labor data was not fully “felt” in January’s job market report. Some analysts expect layoffs will appear more profoundly in February’s data, scheduled for release on April 1.

“These January data included only the earliest days of DOGE-inspired layoffs of federal workers,” commented Carol Weinberg and Mary Chen of High Frequency Economics. “There is no evidence of federal government layoffs in this report. That does not mean that large-scale job cuts won’t be a major feature of the February report.”

Job market holds steady, but fears over job cuts still remain

According to labour data, there is a downward trend in job openings over the past three years, but vacancies remain above pre-pandemic averages. The hiring rate was unchanged in January, and the layoffs rate dipped to 1%, the lowest since June, which could mean there’s a limited-hiring, limited-firing balance in the US economy.

The so-called “quit rates,” or voluntary resignations, climbed to 2.1%, the highest level since July, taking a slow turn from the steady decline seen since 2022.

Still, more recent updates spell signs of a softening labor market, with unemployment claims rising to a nearly three-year high in late February, and the latest jobs report showed the unemployment rate accelerating upwards by 4.1%.

The ratio of job vacancies to unemployed workers, an info the Fed will be using to make interest rate cut decisions, remained steady at 1.1. It is still above pre-pandemic levels, but the ratio has dropped from its peak of 2-to-1 in 2022, meaning job demand numbers have cooled down in the last three years.

Federal reserve maintains cautious stance

The latest job market figures could fail to convince the Federal Reserve to cut its benchmark interest rate during its upcoming policy meeting on March 19. The rate, currently set between 4.25% and 4.50%, has remained steady since January.

Market expectations for an interest rate cut at the Federal Open Market Committee’s (FOMC) next meeting are low, with the CME FedWatch Tool placing the probability at just 3%. 

At a press conference in Chicago on March 7, Federal Reserve Chair Jerome Powell said that recent readings of inflation are still above the 2% Fed goal, even though inflation has generally gone down.

“Many indicators show that the labor market is solid and broadly in balance. If inflation is not at the FOMC’s target level and the job market remains robust, then the FOMC may not be inclined to cut rates,” Powell remarked.

Since September 2024, the central bank has reduced its policy rate by 100 basis points following a prolonged tightening cycle in 2022 and 2023 that saw interest rates rise by 5.25 percentage points to take on inflation risks.

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