The Bureau of Labor Statistics released the February Job Openings and Labor Turnover Survey yesterday, and the picture was not good. Most notably, there was a big drop in hiring, from 5,347,000 in January to 4,849,000 in February. Taken as rates, hires went from 3.4 percent of employment to 3.1 percent. 

That is definitely a bad story, but it is important not to make too much of one month’s data. As usual, Guy Berger has the smart take on this. Guy reminds us, it is just one month’s data. And importantly, it follows somewhat of an uptick in January. Folks may recall that I argued that January’s jobs data was better than it otherwise would be due to unusually good January weather across the Northeast and Midwest. This virtually guaranteed that February’s data would look weak.

It is important to remember that the monthly data here are not like a football game where each game starts out 0-0. There are very direct links between what happens one month and what happens the next. If employers hired more workers than usual in January, due to better than normal weather, they would hire fewer than normal in February. (Remember, these data are seasonally adjusted, so we are not comparing January weather to June weather; we’re comparing it to prior Januarys.) 

Having cautioned about reading too much into the monthly drop-off, there still is no doubt that we are seeing weak hiring. Two years ago, the hiring rate in February was 5.9 percent. At the peak of the Biden boom, in July of 2021, it hit 10.0 percent. That was clearly unsustainable, but the comparison does show the extent of the falloff. The last year before the pandemic when the hiring rate was this low was 2012, when the unemployment rate averaged 8.1 percent. 

The flip side of low hiring is that separations, both quits and layoffs, are unusually low. The quit rate was 1.9 percent in February. That’s down from a peak of 3.0 percent in April of 2022. This is roughly the same level as the year-round average in 2014. This means workers don’t feel they have the ability to quit a bad job and find a better one.

On the plus side, the layoff rate remains low at 1.1 percent, the same as 2023 and lower than in any year prior to the pandemic. At least workers don’t have to worry too much about losing their jobs.

But all this comes with the huge qualification that it is pre-war data. There is no reason to think the labor market fell off a cliff when the war broke out, but it likely did change plans for both consumers and employers. 

Consumers likely began putting off big-ticket purchases due to uncertainty and higher interest rates. The higher gas prices they began seeing also probably reduced their spending on non-necessities, like eating out. Employers also were probably more cautious in hiring after the war broke out, putting off non-essential hiring and expansion plans.

Not much of this will be visible in the March jobs report that will be released on Friday. The reference period runs through the 12th, so we will only be seeing the impact through the first half of the month. But it’s a safe bet that it will be negative. If the war continues and oil and gas prices remain elevated, we will be seeing a worsening labor market picture through the spring. 

Those waiting for a Trump boom will have to wait somewhat longer.