Will Decline in Job Openings Lead to Cautious Spending by Consumers?

A report this week that job openings slipped in December, right at a time when a steady number of employees were leaving the workforce, poses the question as to whether there might be an imbalance looming in the job market — where the trend is more workers vying for a dwindling pool of positions.

The latest Job Openings and Labor Turnover Survey (JOLTS) was released earlier this week by the Bureau of Labor Statistics.

The headline numbers show that the vacant positions, or job openings, slipped to about 7.6 million. That’s 556,000 fewer roles than had been seen in the previous month. November’s openings stood at 8.1 million. And it must be noted that the consensus for December had been around 8 million.

Monthly and Annual Dip

The annual dip in job openings — as measured through all of 2024 — was 1.3 million. The job openings rate — which is the percentage of jobs out there for the taking vs. the total workforce, was lower, to 4.5%, and that percentage had been north of 5% earlier in the year.

The latest data from the BLS indicate that the December tally is the lowest monthly level of job openings since the beginning of 2021. The data indicates the number of total separations in December was little changed at 5.3 million. The total separations rate remained unchanged at 3.3% month over month. Over the month, the quits rate was unchanged at 2%. Quits decreased in transportation.

The decline in total job openings — both on a monthly and annual basis — suggests a contraction in employer demand or a potential pause in recruitment. This reduction is notably driven by decreases in key sectors:

Professional and Business Services: Down by 225,000 roles.

Health Care and Social Assistance: Down by 180,000 positions.

Finance and Insurance: Down by 136,000 jobs.

We note that modest decline in quits could be interpreted as a sign of reduced worker confidence or fewer alternative opportunities. However, the increase in layoffs/discharges in specific sectors such as transportation and mining may indicate targeted adjustments or challenges within those industries.

Small businesses appear to be maintaining steady employment practices, whereas larger firms are experiencing higher turnover through increased layoffs/discharges and total separations.

The Beveridge Curve

The chart below illustrates the relationship between the job openings rate and the seasonally adjusted unemployment rate.

Matching efficiency: The curve illustrates how effectively the labor market is matching job seekers with available vacancies. A typical or stable curve indicates an efficient matching process, while deviations may signal structural issues.

Current implications: With a job openings rate of 4.5%, if the corresponding unemployment rate remains relatively elevated, it may suggest inefficiencies in matching or possible skill mismatches.

Conversely, a lower unemployment rate alongside the decline in job openings could imply a tightening labor market where employers are becoming more selective or where workers are finding fewer alternative opportunities.

The read across is that it may take longer for employers to fill roles — and if the number of job openings are declining, individuals and households may be reticent to take the plunge and look for new roles.

As PYMNTS Intelligence has found, one-third of consumers say they have better career prospects in the current environment and in the months ahead. But that leaves a majority who say that conditions are the same, or in fact worse than had been seen in the recent past.

Similarly, only a third of consumers struggling to pay bills say the future looks brighter on the employment scene. Where there’s caution about what lies ahead, the natural inclination might not be to keep spending at the rate one once was, until the employment picture is clearer.