WASHINGTON (Reuters) - U.S. job openings dropped for a second straight month in December to hit their lowest level in two years, while hiring increased marginally, suggesting a recent acceleration in job growth was unlikely to be sustained.
The report from the Labor Department on Tuesday also showed a pick-up in layoffs at the end of the year. Though job openings remain relatively high, economists said the sharp declines at the end of 2019 were potentially warning signals for the longest economic expansion on record, now in its 11th year.
Federal Reserve Chairman Jerome Powell on Tuesday struck an upbeat note on the economy and labor market, telling the U.S. House of Representatives Financial Services Committee that the economy was “in a very good place, performing well.”
“Something is happening out there to the economy and while we can’t be quite sure what it is, this collapse in the need for labor on the part of companies is not a positive development,” said Chris Rupkey, chief economist at MUFG in New York.
Job openings, a measure of labor demand, decreased 364,000 to 6.4 million, the lowest reading since December 2017, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS. The second straight monthly decline in job openings followed a 574,000 plunge in November, which was the biggest drop since August 2015.
Vacancies dropped by 14.9% in 2019. They peaked at 7.6 million in November 2018. Some economists said while the steep decline in job openings from the peak was concerning, they noted that vacancies continued to outpace the number of unemployed Americans, which was 5.9 million in January.
“It is possible the decline in job openings represents in part better job matching, greater willingness of employers to hire and train workers, rather than a cautionary signal, but these data should be watched closely in upcoming months,” said John Ryding, chief economic advisor at Brean Capital in New York.
The government reported last week that nonfarm payrolls surged by 225,000 jobs in January after increasing 147,000 in December. The unemployment rate rose one-tenth of a percentage point to 3.6% as more people entered the labor market, a sign of confidence in their job prospects.
The drop in job openings in December was concentrated in the private sector, which saw a 332,000 decline. The transportation, warehousing and utilities industry experienced an 88,000 decrease in vacancies in December. There were 34,000 fewer job openings in real estate, rental and leasing. The educational services sector also saw a decrease of 34,000 vacancies.
The job openings rate declined to a two-year low of 4.0% in December from 4.3% in November. Hiring rose to 5.9 million in December from 5.8 million in November. It was lifted by a 69,000 increase in hiring in the accommodation and food services industry. The hiring rate edged up to 3.9% in December from 3.8% in the prior month.
The number of workers voluntarily quitting their jobs slipped to 3.5 million from 3.6 million in November. The quits rate was unchanged at 2.3% for the fourth straight month. The quits rate is viewed by policymakers and economists as a measure of job market confidence.
“We expect the labor market expansion to endure in 2020, but the pace of expansion will slow,” said Sophia Koropeckyj, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Risks are, however, stacked to the downside, at least in the near term due to the fallout from the coronavirus, problems in the aircraft industries, and the possibility of policy missteps, such as restrictions on trade.”
Layoffs increased to 1.9 million in December from 1.8 million in November. Layoffs increased in the arts,
entertainment and recreation sectors, and other services. They, however, fell in state and local government, excluding education, and the federal government.
The layoffs rate was unchanged at 1.2% in December.
Reporting By Lucia Mutikani; Editing by Andrea Ricci