WASHINGTON (Reuters) – U.S. job openings increased in January, but demand for labor is likely to soften in the months ahead amid concerns that uncertainty over import tariffs and aggressive government spending cuts could cause a sharp slowdown in economic activity.
Job openings, a measure of labor demand, rose 232,000 to 7.740 million on the last day of January, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday.
Data for December was revised lower to show 7.508 million vacancies instead of the previously reported 7.600 million.
Economists polled by Reuters had forecast 7.63 million unfilled positions.
President Donald Trump’s whiplash trade policy, marked by on-again and off-again tariffs against Canada and Mexico, have shaken business and consumer confidence.
Investors have dumped stocks, wiping all the gains notched in the aftermath of Trump’s victory in November, as the risks of a recession have increased from the trade tensions.
Trump, who has doubled duties on Chinese goods to 20% and raised levies on steel and aluminum imports as well as threatened reciprocal tariffs, on Sunday declined to comment whether the economy could experience a downturn.
Tech billionaire Elon Musk’s Department of Government Efficiency, or DOGE, has fired thousands of employees in an unprecedented campaign to shrink the government and slash spending. Economists have warned that the mass layoffs and spending cuts, which have also impacted federal contractors, would spill over to the private sector.
Though job growth was solid in February, there were plenty of red flags for the labor market. A broader measure of unemployment surged to near a 3-1/2-year high as the ranks of part-time workers swelled. The share of workers holding multiple jobs was the highest since the Great Recession.
Layoffs dropped 34,000 to 1.635 million in January, the JOLTS report showed. But opportunities continue to dry up as caution reigns among employers. Hires rose 19,000 to 5.393 million.
The Federal Reserve is expected to leave its benchmark overnight interest rate unchanged in the 4.25%-4.50% range next week. Financial markets expect the U.S. central bank to resume cutting rates in June because of the deteriorating economic outlook, after pausing in January.
The policy rate has been reduced by 100 basis points since September when the Fed started its easing policy cycle. The central bank hiked the policy rate by 5.25 percentage points in 2022 and 2023 to tame inflation.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
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