Private-sector hiring slowed in November, sinking to one of its weakest readings in more than a decade and signaling growing concern about a cooling labor market.
The private-sector hiring rate sank to 3.5% in November, the Bureau of Labor Statistics reported Wednesday in an update to the Job Openings and Labor Turnover Survey. The rate has dropped that low just three other times since the pandemic, and before that, it was not that low since 2011, when the economy was recovering from the Great Recession.
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The overall hiring rate has also fallen to 3.2%, one of the lowest levels since the post-recession recovery.
Additionally, job openings fell by more than expected in November. Job openings dropped to 7.1 million, a decrease of about 885,000 from a year ago. That is well below the 7.6 million openings that economic forecasters had anticipated.
Job openings have, on balance, been trending lower over the past couple of years, following a significant surge in openings after the pandemic. Some of the slowing in the labor market is likely attributable to the Federal Reserve hiking interest rates in an effort to stave off inflation, although the central bank has pivoted to cutting interest rates amid indications of a slowing labor market.
Fed Chairman Jerome Powell and other economists have described the labor market as being in a “low-fire, low-hire” state, in which there have not been mass layoffs, but some people out of work are struggling to get hired.
“For many workers, the labor market has effectively become a game of musical chairs where the music has stopped and everyone is simply staying in the seat they have,” Cory Stahle, an economist at the Indeed Hiring Lab, said in a statement on the report. “Without a healthy churn of workers moving to better opportunities, the market is losing the dynamism that typically drives wage growth and economic momentum.”
About 3.2 million workers quit their jobs in November, an increase from the previous month. The figure is equivalent to about 2% of the workforce, below the pre-pandemic level.
A higher “quits rate” is generally regarded as a positive sign. It measures the share of people who voluntarily leave their jobs and includes those who leave their previous employment for another job, as well as those who quit but are confident they will soon find new employment.
Also notable in Wednesday’s JOLTS report is that layoffs and discharges reached 1.7 million in November.
In a bit of positive news on Wednesday morning, payroll processing company ADP reported that private employers added 41,000 jobs in December, reversing a loss of 29,000 jobs in November. Still, the number came in slightly below forecast expectations.
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All eyes will be on this Friday’s federal jobs report. The economy added 64,000 jobs in November, and the unemployment rate rose to 4.6%. Forecasters expect that more jobs will be added in December.
The Fed will closely parse the latest data as it considers what to do with interest rates during its next meeting later this month.
