Spending Pullback May Worsen as Job Openings Decline and Layoffs Edge Up

There are fewer jobs to be had, and layoffs have inched up.

Consumer confidence was already shaken ahead of the Bureau of Labor Statistics’ latest snapshot of the labor market released Tuesday (April 1). The specter of uncertain job security may accelerate a spending pullback already in motion.

The bureau’s Job Openings and Labor Turnover Survey (JOLTS) showed that February’s data underscores a slowing labor market, with a noticeable decline in job openings over the past year.

The seasonally adjusted job openings rate stood at 4.5% overall in February, slightly below the 4.7% recorded in January and a substantial decline from the 5.1% observed in February last year.

There were 877,000 fewer job openings year over year. The most notable decline occurred in the finance and insurance sector, which shed 80,000 openings over the month.

Hires remained steady at 3.4% of total employment, with no significant movement across industries. This stability follows a broader trend of muted hiring activity that has persisted over the past several months. Compared to February 2024, the hiring rate is slightly lower, reflecting cautious employer sentiment.

Total separations remained at 5.3 million or 3.3%, with minor industry-level variations. Quits, which serve as an indicator of worker confidence, stood at 3.2 million or 2%, a reduction of 273,000 compared to a year ago. Individuals and households are cognizant of the macroeconomic volatility that’s out there and are less inclined to move out of their present roles — even if the state of those roles may be uncertain.

Meanwhile, layoffs and discharges edged up to 1.8 million, with increases seen in retail trade (67,000), real estate and rental and leasing (24,000) and federal government (18,000). The last data point underscores the (widening) impact of cuts to government ranks. The thinning of the ranks in the retail sector indicates that merchants are girding for a continued pullback in demand into spring and possibly summer.

Industry-specific trends revealed that leisure and hospitality experienced a 0.4 percentage point decline in job openings from January, holding at 5.5%. The sector’s hiring rate also fell from 5.3% to 5.2%, below the 6.1% recorded a year prior. Separations in the industry increased slightly to 5.4%, so retail isn’t the only segment anticipating a fickle consumer.

Airlines had already started telling investors last month that travel demand is slowing, so the ripple effect on the leisure industry may be pronounced into peak traveling season.

The smallest firms that line the Main Street economy are holding steady, but they do not seem to be in expansion mode. By establishment size, small businesses (one to nine employees) saw the most significant decrease in layoffs and discharges. The quits rate and other separations rate also decreased.

The latest JOLTS data underscores the labor market’s sluggish momentum, with declining job openings and hiring coupled with a modest rise in layoffs. While layoffs remain low by historical standards, the continued decrease in job openings suggests that employers are cautious about expanding their workforce in the current economic climate.

Consumers are putting money in the bank where they can. Disposable personal income, which accounts for personal income after taxes, increased by $191.6 billion, or 0.9%, according to government data released last week. The personal saving rate, measured as a share of disposable personal income increased to 4.6% in February, reaching $1.02 trillion. We’re well above the 3.3% saving rate that was notched in December.

As for the latest spending report, there’s not much momentum. February’s retail sales were up 0.2%, and that was off a downwardly revised January. The commerce picture would have been worse had it not been for online spending, as non-store retailers (a category that includes eCommerce activity) showed sales gains of 2.4%.

The latest jobs data will do little to push consumers to spend more.

The post Spending Pullback May Worsen as Job Openings Decline and Layoffs Edge Up appeared first on PYMNTS.com.