Broader Indicators Signal Cooling Labor Conditions

The softness seen in ADP is not an outlier. Revelio Labs reported 13,300 job losses in January in their non-farm payroll release. Their results gained prominence during last fall’s government shutdown, when official BLS data was delayed.

Unemployment claims also point to cooling conditions. Initial jobless claims rose by 22,000 to 231,000, the highest level since early December, while continuing claims increased by 25,000 to 1.844 million. Continuing claims have remained elevated for an extended period, suggesting unemployed workers are taking longer to find new opportunities.

Labor demand is weakening as well. Job openings fell to 6.54 million in December from 6.93 million in November and remain far below the 2022 peak of more than 12 million. Because some remote roles are posted across multiple states, the true number of available jobs may be even lower.

Layoff and hiring announcements further underscore the slowdown. Challenger, Gray & Christmas reported 108,435 job cut announcements in January – the highest January total since 2009 and triple the amount seen in December. At the same time, hiring announcements fell to just 5,306, the lowest January reading since Challenger began tracking hiring plans seventeen years ago.

What’s the bottom line?
Elevated unemployment claims, fewer job openings, rising layoffs, and subdued hiring plans all reinforcethe view that the labor market is steadily cooling.