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June 3, 2025

Job openings edged higher in April. There were 7.4 million according to the latest Job Openings and Labor Turnover Survey (JOLTS), up from 7.2 million last month. On a three-month moving average basis, openings have remained within the range of 7.4 million to 7.8 million since June 2024. Monthly shifts tend to obscure a relatively stable labor market.

Real-time data from Indeed Hiring Lab show that advertised job postings have fallen by five percentage points year-to-date, to 106.5 from 111.5 at the end of December. That shows a steady decline, not a collapse. Postings have been flat so far for May, which suggests that labor demand remains steady despite downside risks.

Job openings fell in small businesses (those with 1-49 employees) on a three-month moving average basis. Layoffs rose to the second-highest level in over two years. Yet hiring remained strong, suggesting that the bulk of the headwinds due to tariffs, uncertainty and immigration policy is ahead of us.

According to the ADP National Employment Report, small business job gains have slowed since the start of the year. Firms with 1-49 employees gained an average of 40,000 jobs each month in 2024; that has dropped to +10,000 between February and April 2025. In April, firms with 20-49 employees lost 9,000 jobs, while those with 1-19 gained 20,000.

Job openings rose the most month-over-month in professional and business services (+171,000). Both hiring and layoffs rose in the industry. The layoff rate was 2.1%, the highest since last September. Companies are reorganizing workforces around GenAI and shifts in federal government contracts, which disproportionately affect the consulting industry.

ealthcare and social assistance posted a gain of 102,000 openings; leisure and hospitality showed a loss of 92,000. The accommodation and food services sector accounted for that loss. This is an area that is most at risk of a pullback in discretionary spending as goods prices rise. It is broadly exposed to immigration, which has fallen sharply since mid-2024.

Job openings dropped in state and local government education by 51,000. Openings in the industry have fallen to the lowest level in nearly four years. The federal government is reducing funding for research while many state governments are facing budget shortfalls even before planned cuts to Medicaid. The university business model is facing an existential threat; risks are to the downside for future employment in higher education.

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market, tracked closely by Federal Reserve officials, was flat at 1.0. That reflects a labor market in balance.

Some good news: the hiring rate ticked up to 3.5% after sitting at 3.4% for four straight months. A 3.5% hiring rate is still low; on a three-month moving average basis, the rate remained at 3.4% for the eighth straight month. Hiring picked up in construction and mining and logging after dropping last month.

Layoffs ticked up to 1.1% from 1% last month. The rate had been 1.1% for five straight months before last month. Layoffs have actually trended up on a three-month moving average basis over the past several months, though there has not been a sharp upturn. This is one factor holding the unemployment rate in check, along with a reduction in the supply of foreign-born workers. 

The quits rate remained flat at 2% on a three-month moving average basis. Workers are not voluntarily leaving their jobs. The , a proxy for worker bargaining power, edged down as quits fell and layoffs rose. That leaves little margin of error for the labor market should layoffs pick up.

We are expecting a slight uptick in unemployment by the end of this quarter with a gradual increase by year-end. We expect it will not be enough for the National Bureau of Economic Research (NBER), the official arbiter of recessions, to declare the economy is in an "official" recession. That does not mean it will not be painful given rising inflation along with unemployment, or "stagflation." (Remember, most consumers thought we were in a recession in 2022, despite ongoing job gains; that was due to inflation. Price levels for the basic items of food and shelter remain elevated.)

ADP data show that the wage premium for switching jobs ticked up to 6.9% from 6.7% in April; those who stayed in their jobs saw wage growth of 4.5%, down from 4.6%. Even with shrinking wage growth for job stayers, American workers are not jumping ship. The labor market is a bit frozen, with employers reluctant to fire workers they competed hard to get earlier in the expansion. They are also being cautious about ramping up hiring, due to elevated levels of uncertainty.