The fewest workers on record were fired in January and job openings rebounded, showing employers are gaining confidence the U.S. expansion will be sustained even as lawmakers battle to trim the federal budget deficit.
There were 1.51 million people let go in the month, down from 1.57 million in December and the least in data going back 12 years, the Labor Department said today in Washington. The number of positions waiting to be filled climbed by 81,000 to 3.69 million after slumping by 177,000 in December.
The report shows recent payroll gains are being driven more by a reduction in dismissals than a surge in hiring, indicating sales are strong enough for companies to retain current staff. Acceleration in employment is needed for the labor market to make further progress and push down the nation’s 7.7 percent unemployment rate.
“The fact that the firings are abating shows just how tight the labor-force components are for business,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit and the top-ranked payroll forecaster in the past two years, according to data compiled by Bloomberg. “Businesses are becoming increasingly confident in the economic outlook.”
Stocks fell, snapping a seven-day rally in the Standard & Poor’s 500 Index that drove the gauge to within nine points of a record. The S&P 500 declined 0.2 percent to 1,552.48 at the close in New York.
Elsewhere today, U.K. industrial production unexpectedly fell in January as factory output slumped, fueling concern Britain may slip into another recession, figures from the Office for National Statistics showed in London.
The pace of firings has probably slowed further going into this month. The number of Americans filing for unemployment benefits declined to a six-week low in the seven days ended March 2, the Labor Department reported last week. An average 348,800 a week filed jobless claims over the past month, the fewest in five years.
Today’s report helps shed light on the government’s monthly jobs data. Payrolls grew by 119,000 workers in January and 219,000 in December. Job creation accelerated in February, with employment rising by 236,000, the Labor Department said March 8.
The number of openings in January was still short of the four-year high of 3.85 million reached in March 2012. Help wanted waned in December as the Obama administration and Congress locked horns over how to prevent the tax increases and budget cuts that came to be known as the fiscal cliff.
The number of workers hired in January increased to 4.25 million from 4.2 million in December, leaving the hiring rate unchanged at 3.1 percent, according to today’s report. The rate peaked at 3.4 percent for a couple of months in the first half of 2012.
“The pace of hiring is still not great,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “The labor market is going fairly steady. It could be a lot better, but it also could be a lot worse.”
Job openings at professional and business services led the gains in January, followed by trade, transportation and utilities. The latter was propelled by a jump among retailers.
Health care and social assistance companies showed the biggest decline in jobs available.
In addition to the decrease in firings, another 2.22 million people quit their jobs in January, up from 2.13 million in the prior month and the most since October 2008. The combination of fewer dismissals and the increase in those voluntarily leaving their jobs kept the total separations rate at 3 percent.
An increase in the number of workers quitting their jobs shows growing confidence in the odds of finding new work, said Janet Yellen, vice chairman of the Federal Reserve, who is among policy makers looking at these data to determine when the job market has made enough progress to reduce stimulus.
“Layoffs and discharges as a share of total employment have already returned to their pre-recession level, while the hiring rate remains depressed,” Yellen said in a speech last week. “Therefore, going forward, I would look for an increase in the rate of hiring. Similarly, a pickup in the quit rate, which also remains at a low level, would signal that workers perceive that their chances to be rehired are good.”
She said the central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program. She echoed Chairman Ben S. Bernanke’s comment the previous week that the benefits of the Fed’s historically low interest rates and near-record $3.09 trillion balance sheet outweigh any risk of financial instability.
In the 12 months ended in January, the economy created a net 2 million jobs, representing 52 million hires and about 50 million separations, today’s report showed.
Considering the 12.3 million Americans who were unemployed in January, the figures indicated there were about 3.3 people vying for every opening, up from about 1.8 when the recession began in December 2007.
Employers in all 50 states and the District of Columbia reported positive hiring plans for the second quarter, according to a survey of more than 18,000 companies by Manpower Inc. issued today. Those in the leisure and hospitality and professional and business services industries had the most positive outlooks. In addition, the share of employers anticipating having to cut staff, at 5 percent, was at the lowest since 2000.
More recent data show the labor market gained strength in February. The unemployment rate fell to 7.7 percent from 7.9 percent in January and industries from film-making to accounting to construction powered broad-based gains as employers remained confident in the face of federal budget cuts and tax increases. Private payrolls grew by 246,000, the most since November.
The strength came before $85 billion in automatic across-the-board budget cuts, known as sequestration, began to kick in on March 1 after Congress failed to reach a compromise on deficit reduction. That followed a 2 percentage-point increase in the payroll tax in January.
Maintaining labor market momentum will help those still out of a work, like Jim Barry, find employment. Barry was let go in 2009 from his purchasing position at Girl Scouts of Connecticut, where he had worked for two years. Searching for a job, he says he’s sent out at least 120 resumes.
“There’s what’s called the black hole,” said Barry, who has a graduate degree in choral conducting from Yale University in New Haven, Connecticut. “You never hear back from them. You lose track after a while.”
Amid the search, Barry said he has kept his part-time job as a church musician in the greater Hartford area, which he has held since 2007. He works 10 hours to 15 hours a week and is living on the income from the job in addition to his savings.
“It limits my ability to purchase,” he said. “I don’t go to the store very often. I don’t do many vacations. It just limits what you can do.”
Barry’s job-finding prospects may improve in coming months, according to the Conference Board’s Employment Trends Index, released yesterday. The measure of job prospects in the U.S. climbed in February by the most in a year.
General Motors Co. is among companies planning to expand. The Detroit-based automaker said last week it plans to hire 1,000 staffers for its information technology operations center in the Phoenix area. The hiring is part of GM’s plan to add about 7,500 information technology workers.