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April 1, 2025

Job openings cooled slightly at the end of February: There were 7.6 million according to the latest Job Openings and Labor Turnover Survey (JOLTS). 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 fluctuations obscure the overall trend of a labor market that has slowly cooled from a year ago. 

Real-time data from Indeed Hiring Lab show that advertised job postings have ticked down so far in 2025. Postings declined more in March than in February; that likely reflects federal government layoffs and spillover effects along with policy-driven uncertainty. To date, the effect has not been as large as many had predicted; the labor market remains mostly steady.

The outlook is less positive for the three industries that accounted for the majority of job growth since mid-2023. Openings declined in leisure and hospitality (-61,000), healthcare and social assistance (-46,000) and state and local government (-7,000). That supports our expectation that overall payroll growth could be weak in March and the months ahead.

Job openings declined in retail trade (-126,000) and finance and insurance (-80,000). Retail sales were weaker than expected in February; consumers began to hunker down as confidence plummeted due to new tariffs and higher costs. Openings rose by 134,000 in professional and business services. That recouped most of the drop in January but remained a touch below the level at the end of December. 

The ratio of job openings to unemployed job seekers, a measure of balance in the labor market tracked closely by Federal Reserve officials, remained flat at 1.1 for the fifth straight month; that shows a steady labor market.

The hiring rate came in flat at 3.4% for the third straight month. Hiring picked up in professional and business services; the rate rose to 4.6% from 4.3%. That tied the highest rate in almost a year. Companies are hiring in strategic growth areas such as GenAI. Overall, the hiring rate remains low by historical standards.

The layoff rate remained low at 1.1% for the fifth straight month but in the federal government layoffs soared to 22,000 at the end of February from 4,000 the month before. Layoffs were flat in state and local government. We will need to wait until the March data to gain a better sense of the volume of public sector layoffs.

Quits were flat month-over-month; they remained lower than the pre-pandemic baseline. State and local government education posted the largest increase at +28,000. This could reflect many workers leaving to take new positions as they worried about potential layoffs.

The , a proxy for worker bargaining power, ticked down in February. ADP data show that the wage premium for switching jobs continues to decline. That is in line with data from the Federal Reserve Bank of Atlanta, which found that there is no longer a wage premium for switching jobs. That, along with a low quits rate, suggests there will be continued downward pressure on wages that will leave consumers less able to absorb price increases associated with tariffs. That shift will help the Federal Reserve to battle inflation.