US Labour Market Cracks as Job Openings Plunge to 7.1mn

Two key reports released on 7 Jan show a distinct deceleration in hiring demand. The disconnect between falling job openings and sticky wage growth has left markets and Bitcoin on edge.

Private sector hiring remains anaemic. The latest ADP National Employment Report shows US companies added just 41,000 jobs in December, missing analyst expectations of 47,000.

While this marks a return to positive territory, the broader trend is concerning. November’s figures were revised downward to show a loss of 29,000 jobs rather than the initially reported 32,000 decline.

The growth is uneven. Service providers carried the economy, with education and health services adding 39,000 roles. Meanwhile, the manufacturing sector shed another 5,000 jobs and professional business services lost 29,000 positions.

Wage data offers a headache for the Fed. Annual pay growth for job-stayers held steady at 4.4%. Job-changers saw their pay accelerate to 6.6%, up from 6.3% in November. This wage stickiness suggests inflationary pressure remains latent in the system.

The demand side of the equation is deteriorating more sharply. The JOLTS report from the Bureau of Labor Statistics shows job openings fell to 7.1mn in November, well below the forecast of 7.6mn.

Vacancies are vanishing in key consumer-facing sectors. Accommodation and food services lost 148,000 openings while transportation and warehousing dropped by 108,000.

The data reinforces the "stagflation lite" scenario currently worrying the Federal Open Market Committee.

Minneapolis Fed President Neel Kashkari highlighted this tension on Monday. "The inflation risk is one of persistence, that these tariff effects take multiple years to work their way through the system," he said. "Whereas I do think there's a risk that the unemployment rate could pop from here."

Fed Chair Jerome Powell has also urged caution regarding the raw numbers. In December, he noted that monthly job creation figures might be overestimated by as much as 60,000, masking the true extent of the slowdown.

Bitcoin reacted negatively to the print, dropping 1.0% to $91,024 immediately following the release.

Typically, weak labor data buoys crypto assets by increasing the odds of aggressive rate cuts. However, the sharpness of the miss appears to have stoked recession fears instead. Markets are now pricing in a higher probability that the Fed has waited too long to ease, risking a policy error that could capsize both the economy and risk assets.