Fewer job openings but low layoffs

February 5, 2026

Job openings declined through 2025. There were 6.5 million jobs available at the end of December, according to the latest Job Openings and Labor Turnover Survey (JOLTS). The November jobs were revised down to 6.9 million from 7.1 million. The rate of job openings declined to 3.9%, the lowest rate in more than eight years apart from losses in March and April 2020.

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by Federal Reserve officials, was 0.9 in December. Before rounding, the 0.87 ratio marks a new cyclical low.

Real-time data from Indeed Hiring Lab show that advertised job postings leveled out in December and January. They have been flat since the Fall. That means a continuation of the low-hire, low-fire environment; many workers are frozen in place.

Job openings declined among small businesses (firms with 1-49 employees) while hiring rose in December. The ADP employment report found that small business employment flattened out in January. A gain of 30,000 for the smallest firms (1-19 employees) was offset by a decline of 30,000 at firms with 20-49 employees. The latter have shed 119,000 jobs over the last five months.

Job openings declined by 423,000 in the private sector; they rose in government by 37,000, driven by gains at the state and local levels. Professional and business services (-257,000) led the declines. Hires and quits both declined in this sector; the only silver lining: layoffs fell.

The JOLTS report does not break up the details of the professional and business services sector as the monthly employment report does. A Harvard Business Review article argues that companies are reducing head count due to the perception of AI gains rather than current use cases. That could be slowing labor demand.

Openings fell in retail trade (-195,000), finance and insurance (-120,000) and healthcare and social assistance (-92,000). Part of that is just returning to trend; the JOLTS data can be noisy.

The overall hiring rate ticked back up to 3.3% from 3.2%. On a three-month moving average basis, hiring was flat at 3.3% for the sixth straight month. The low hiring rate is not lost on job seekers.

Good news: layoffs were flat at 1.1%. Except for one month, the layoff rate has been reading 1.1% for 16 straight months. Aggregate layoffs remain at historically low levels. Within the context of the low hiring environment, if layoffs worsen even a little, that could hit workers even harder.

The quits rate was flat at 2% in December. Except for one month, quits have been flat for 11 straight months on a three-month moving average basis.

The Labor Leverage Ratio, a proxy for worker bargaining power, ticked down in December. According to ADP data, pay growth for job changers fell to 6.4% in January; that is down from 7.1% in August. It means we are seeing fewer quits in a frozen labor market.