As Hiring Stalls, Will Consumers Pull Back on Spending?
Job openings were up in November, but so were layoffs, and the pace of quitting fell too … all of which, for November’s government data, point to some uncertainty in the labor market.
That uncertainty may push consumers — particularly those living paycheck to paycheck — to pull back a bit on spending, or at least recalibrate their priorities.
The latest reading on Job Openings and Labor Turnover Survey (commonly known as the JOLTS report) from the Bureau of Labor Statistics, released Tuesday (Jan. 7), showed that job openings were up for the month, standing at 8.1 million roles, up from 7.8 million in October. The 3.3% growth was primarily driven by new openings in the financial activities and professional services sectors. Despite this growth, job openings were still 9.3% lower than November 2023.
Other indicators such as hires, layoffs and the unemployment rate sent discomforting signals. Overall layoffs and discharges were 1.8 million in the latest month, up from October’s 1.7 million.
Looking at sector-level dynamics, retail vertical shows some indications of recovery from its poor performance in the first part of the year, reporting 533,000 job openings — though the sector is well below the recent peak of 596,000 openings reported in November 2023.
The food and accommodation sector reported a sharp increase in layoffs, with 205,000 discharges in November — a 40% rise compared to November 2023.
The business and professional services sector has been a key driver in the recent increase in job openings. In November, the sector reported 1.9 million job openings, the highest since January 2023. Nearly one-third of office-based workers in this sector reported seeing better job opportunities compared to three years ago.
But overall, there still remains a bit of caution in the mix: Losing one’s job still is a concern for a significant percentage of the population as 31% of employed individuals are concerned about being laid off in the next 12 months. Fears worsen for workers without financial stability: 43% of those living paycheck to paycheck with trouble paying bills fear layoffs.
A Bit of Caution
As detailed in recent PYMNTS Intelligence research, and as seen throughout 2024, 94% of paycheck-to-paycheck consumers have changed their retail shopping behavior due to perceived price increases. Additionally, these consumers spend an average of 43% of their income on housing, leaving less for other needs — particularly discretionary purchases and emergencies.
There will be additional data this week on December hiring, and, separately, from the Federal Reserve on consumer credit changes. If more debt had been utilized into the holiday shopping season, it may be the case that digesting it all may take some time, throttling back a bit on spending. Though there are job openings, filling them seems to be taking time. January is a time to plan what comes next, and caution may be more a hallmark of consumers’ spending plans than splurging.
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