Key Takeaways

  • Job openings fell by 966,000 last year to 6.5 million, the lowest level since September 2020, the U.S. Bureau of Labor Statistics said Thursday.
  • "The hiring recession won't end anytime soon," Navy Federal Credit Union Chief Economist Heather Long said in a statement. She said "businesses are not very interested in hiring right now, except in healthcare and top AI talent," adding that companies "over-hired" in 2022 and 2023.
  • Another sign of a softening labor market: initial jobless claims for the week ending Jan. 31 rose to 231,000, higher than expected, the Labor Department said.

Deeper Dive

The two government reports confirm the weak job market shown in private-sector data this week. ADP said Wednesday that private employers added only 22,000 jobs last month, and 398,000 for all of last year, down from 771,000 in 2024.

Meanwhile, outplacement firm Challenger, Gray & Christmas said employers announced 108,435 job cuts in January, up 118% from January 2025.

"We typically see a lot of layoffs in the first quarter, but this January number is high," Andy Challenger, chief revenue officer at Challenger, Gray & Christmas, said in a statement Thursday. He said the cuts show "employers are not very optimistic about 2026."

Transportation, technology, and health products companies announced the most layoffs in January, Challenger said. UPS announced it would cut 30,000 jobs, and Amazon announced a total of 16,000 job cuts.

"Risks to the labor market remain," Federal Reserve Governor Lisa Cook said Wednesday. She noted that nonfarm payrolls increased by only 50,000 in November and December, and declined in October, showing slowing job creation.

"Low job growth doesn't necessarily mean a weakening labor market; it could be related to a decline in labor supply due to immigration policy and underlying demographics," she said.

Meanwhile, Cook said "labor demand has slowed roughly in line with the decline in labor supply," adding that the job market appears to have "stabilized" at the December unemployment rate of 4.4%. She noted that rate is well below the pre-pandemic 50-year average of 6.2%.

The unemployment rate rising from 3.4% in April 2023 means "we've gone from super strong to strong," Atlanta Fed President Raphael Bostic said Thursday in a Q&A session. "But there's always a concern that once a trend starts moving, it could gain momentum and go from strong to weak."

Long said immigration policy and the highest tariffs since the 1930s are the biggest obstacles to hiring.

"Tariffs have hit small businesses hard, causing them to pause hiring or even lay off workers, while the sharp reduction in immigration has constrained the labor force, making it difficult for some industries to find enough workers," she said.

"Despite strong economic growth and consumer spending, many businesses will remain cautious about hiring in an uncertain environment," Long said.