The job market cooled in January — that’s what the Fed’s been hoping for

Jay Powell was back on the Hill today for his second day before Congress. He said again that the Fed is likely to raise interest rates more than anticipated later this month, but he also stressed that no decision has been made yet.

​And that there’s a lot of new important data just out — and more coming in the next week — that will factor in.

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics came out this morning. It showed the number of job openings declined in January, though it’s still quite high: 10.8 million, down from 11.2 million.

​The number of people who quit jobs also declined, while layoffs rose.

​​So, does all that show that the Fed and its efforts so far to slow down inflation and cool the economy are working?

Well, today’s JOLTS report may show that too much weight should never be put on one particular number or data set.

“But it should be evidence that what the Fed is trying to do is working,” said Wendy Edelberg, director of the Hamilton Project and a Senior Fellow in Economic Studies at the Brookings Institution. She said she was a little hesitant to say this because last month’s jobs report was much stronger than she and other economists were expecting. 

But today’s data, showing that job openings and quits both fell and layoffs ticked up, was “good news,” according to Edelberg.

“But there’s still a lot more to go — baby steps. It’s a baby step in the right direction,” she said.

So far, it’s only in certain industries that the job market’s cooling off. Julia Pollak, chief economist at ZipRecruiter, said one that really stands out is construction.

“Job openings fell an eye popping 49% in construction,” she said. “That’s the industry to watch. That’s the industry that is most likely to show job losses in response to high interest rates.”

There were also fewer openings in accommodation and food services and in finance and insurance. Most layoffs were in “professional and business services,” which includes tech companies.

Layla O’Kane, a senior economist at the labor market analytics company Lightcast, said, perhaps unsurprisingly, that’s also the industry where quits dropped off the most.

“So that kind of means that people are thinking to themselves, ‘Hey, maybe this isn’t a good time to leave my job, I’m not totally certain that I could find a new one,'” she explained.

But O’Kane said in other industries, people are still quitting their jobs and moving into new ones — a sign that most of them aren’t that nervous about the job market. 

Another indication that they aren’t is that unemployment claims are still low. That’s despite the recent rise in layoffs, said Michele Evermore, senior fellow at The Century Foundation.

“I think that what we’re seeing here is that people are relatively certain that when they lose a job, they’re going to be able to find another replacement job soon enough,” she said.

For the most part, that seems to be the case so far. There are still nearly two job openings for every available worker.