US Job Openings Plunge to 6.5M, Igniting Slowdown Fears
Labor market cooling raises recession concerns despite potential for Fed rate cuts
US job openings fell to 6.5 million in December, missing economist forecasts by a wide margin and signaling further cooling in the labor market that has been a pillar of economic resilience. The figure, reported Thursday by the Bureau of Labor Statistics, came in well below the 7.2 million consensus estimate and marked a decline of 386,000 from the prior month's revised level.
The data represents a new post-pandemic low and extends a broader trend of softening labor demand. Throughout 2025, the US economy shed nearly 1 million job openings, according to Wall Street Journal analysis, suggesting that businesses are becoming more cautious about hiring as they navigate higher interest rates and uncertain demand.
The labor market's deterioration poses a dilemma for investors and policymakers. On one hand, weakening demand for workers could ease wage pressures and allow the Federal Reserve to cut interest rates more aggressively, potentially boosting asset prices. On the other, it raises concerns that the economy may be sliding toward recession.
"The drop in job openings is consistent with other data showing the labor market is losing momentum," said analysts at Morningstar. "While this increases the odds of Fed rate cuts, it also suggests the economy is more vulnerable than previously thought."
The December JOLTS report was originally scheduled for earlier release but was delayed due to a partial government shutdown, which also pushed back the closely watched employment situation report. The delayed timing meant markets had to digest the labor market data alongside other economic indicators painting a picture of slowing growth.
Investor reaction was mixed. While the weaker labor data initially triggered concerns about economic growth, some market participants viewed the report as potentially positive for equities if it prompts the Fed to ease policy sooner. The Dow Jones Industrial Average showed volatility, with technology and consumer discretionary stocks among the sectors most sensitive to economic growth expectations.
The declining job openings trend has been broad-based across industries, though certain sectors have shown more resilience than others. Professional and business services, healthcare, and government have maintained relatively stronger labor demand, while interest rate-sensitive sectors like construction and manufacturing have seen more pronounced declines.
Looking ahead, economists will be closely watching the quits rate and hiring data within the JOLTS report for signs of whether workers are becoming less confident about their ability to find new positions—a potential leading indicator of rising unemployment. The February employment report, once rescheduled, will provide additional clarity on whether the softening in job openings is translating into weaker actual hiring.
For Federal Reserve officials, the rapid deterioration in labor market demand may complicate their deliberations. While central bank policymakers have indicated they want to see clear evidence of cooling inflation before cutting rates, too sharp a deterioration in employment could force their hand. The December JOLTS data suggests that the long-anticipated soft landing may be getting softer.