The United States labour market is showing increasing signs of strain, with new data pointing to weakening demand for workers, rising layoffs and a pickup in unemployment claims.
Job openings unexpectedly fell for a third consecutive month in December, sliding by 386,000 to 6.542 million vacancies, according to the latest Job Openings and Labor Turnover Survey (JOLTS).
The reading marked the lowest level since September 2020 and came in well below expectations for 7.200 million openings.
The shutdown-delayed JOLTS report showed that, after months of being described as “little changed”, labour demand dropped sharply at the end of the year.
The job openings rate fell to 3.9%, from a recent peak of 4.6% in September.
Hiring edged higher, but remained subdued by historical standards. The hiring rate ticked up to 3.3%, a level more consistent with the sluggish pace seen in the early 2010s, when the economy was still recovering from the global financial crisis.
Further evidence of cooling conditions came from the latest Challenger, Gray & Christmas report, which showed that planned job cuts surged in January while hiring intentions slumped.
U.S. employers announced 108,435 layoffs during the month, up 118% from the same period a year earlier and 205% higher than December 2025.
The total was the highest for any January since 2009, when the economy was in the depths of the global financial crisis.
At the same time, companies announced just 5,306 new hires, the lowest January figure since 2009 and the weakest since Challenger began tracking the data.
The figures challenge the prevailing narrative of a “no-hire, no-fire” labour market.
“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” said Andy Challenger, workplace expert and chief revenue officer at the firm. “It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026.”
Weekly data on unemployment benefits also pointed to rising pressure. Initial claims for state unemployment benefits jumped by 22,000, the largest increase since early December, to a seasonally adjusted 231,000 for the week ended January 31.
Markets were expecting claims of 212,000.
Severe winter weather may have contributed to the increase, with heavy snow and freezing temperatures affecting large parts of the country late in January.
Unadjusted claims rose sharply in Pennsylvania, New York and New Jersey, with notable increases also recorded in Illinois, Missouri, Ohio and Wisconsin.
Even after accounting for volatility, underlying trends showed some deterioration. The four-week moving average of claims rose by 6,000 to 212,250, while continuing claims, a proxy for hiring conditions, increased by 25,000 to 1.844 million in the week ended January 24, reversing three consecutive weeks of declines.
ANZ analysts commented in a note to clients: "Based on the January Challenger job cuts report, the January ADP private payrolls report and the end-December job openings data, there is no evidence of a recovery in the U.S. labour market.
"Both demand for labour and hiring is weakening, continuing the established theme of 2025 when the economy generated the slowest jobs growth since 2003, excluding recessions.
"It could be argued that the labour market, outside the healthcare and education sectors, is in a hiring recession and that monetary policy is too restrictive when measured against the recent pace of jobs growth. Excess labour supply is building and that is disinflationary.
“We see no reason for a prolonged pause in the rate cutting cycle based on available labour market data.”
