Job openings mask slowdown in key states

Job openings numbers decreased in 13 states in the first month of 2023. California (-163,000), Texas (-98,000) and Michigan (-78,000) led the drop. Other states with large populations reported job increases, such as Florida (+59,000) and Georgia (+48,000). Nationally, the number of job openings dropped to about 10.8 million. 

The ratio of job openings to job seekers stayed at 1.9 in January. For every unemployed person, there were still close to two jobs available. The largest outliers on the upside were South Dakota and Montana which reported ratios equal to or above 3.0, so that means three job openings per job seeker. The outliers on the downside were New York, Connecticut, California, Nevada, Oregon and Washington. The ratio of job openings to job seekers in New York slipped to one-to-one, suggesting it is one of the few labor markets where the demand and supply of workers were roughly in alignment in January.

Over 6.4 million people were hired in January, the highest since September. California saw the largest increase in hirings, with 87,000 more people added to payrolls. Arizona, South Dakota, Ohio and Pennsylvania saw the fastest acceleration in hiring.  Missouri, Minnesota and North Dakota were the only states to see fewer hirings in January.

Total layoffs and discharges went up in January to 1.7 million from 1.5 million in December. Over half of those losses were concentrated in three states: Florida, North Carolina and Texas. This suggests a drop in interstate migration.

The national quits rate ticked down in January to 2.5%, the lowest level since March 2021. Eight states, including Texas and Florida, saw quits rates drop. Idaho, Utah and Wyoming also reported drops. 

The Bottom Line:

Total job openings, hirings, and quits levels were still elevated compared with pre-pandemic levels in January. However, there are some signs of cooling in some of the hottest markets. Those shifts, coupled with a broader tightening of credit conditions, suggest that the labor market will cool as we move into the spring and summer months. How rapidly that occurs will influence how much further the Federal Reserve raises rates.