JOLTS and Labor Market Cooling: What It Means for Markets
From labor demand signals to Federal Reserve policy and equity outcomes—a 25-year perspective on the data that matters most.
Job Openings: A Quarter Century of Labor Demand
U.S. Job Openings (thousands), seasonally adjusted. Data: BLS JOLTS Survey, December 2000 - November 2025.
The Big Picture
The U.S. labor market is experiencing something unusual: a cooling without a crash. Job openings have fallen 41% from their pandemic peak of 12.1 million, yet unemployment remains near historic lows. The quits rate—a measure of worker confidence—has retreated from its "Great Resignation" highs, yet layoffs haven't surged.
This is precisely what the Federal Reserve hoped for. And for investors, it changes the calculus on everything from rate expectations to sector allocation.
"The Fed doesn't need unemployment to rise—it needs labor market pressure to fade. That's exactly what JOLTS is showing us."
Every month, pundits obsess over nonfarm payrolls. But payrolls are a lagging indicator—they tell you what already happened. JOLTS (the Job Openings and Labor Turnover Survey) tells you what's about to happen. When employers stop posting jobs, wage growth slows. When workers stop quitting, bargaining power shifts. These signals appear in JOLTS months before they show up in wages or unemployment.
This article uses 25 years of JOLTS data—300 monthly observations stretching back to December 2000—to understand where we are in the labor cycle, what it means for Fed policy, and which sectors and companies stand to win or lose.
I. Understanding JOLTS: The Data That Matters
Before diving into analysis, let's establish what JOLTS measures and why each component matters for markets.
JOLTS provides four critical signals about labor market health:
| Indicator | What It Measures | Current Level | Signal |
|---|---|---|---|
| Job Openings | Unfilled positions (labor demand) | 7.1 million | Cooling but healthy |
| Quits Rate | Workers voluntarily leaving (confidence) | 2.0% | Normalization |
| Hires | New employment (expansion intent) | 5.1 million | Stable |
| Layoffs | Involuntary separations (stress) | 1.7 million | Historically low |
"Job openings tell you where employers think business is going. The quits rate tells you where workers think they can go. When both decline together without layoffs rising, that's a soft landing in action."
— Labor economist commentary
II. The 25-Year View: Putting Today in Context
To understand where we are, we need to see where we've been. The JOLTS history reveals distinct economic eras.
| Period | Job Openings | Context |
|---|---|---|
| Dec 2000 | 5.1 million | Dot-com peak, first JOLTS reading |
| Dec 2007 | 4.5 million | Pre-financial crisis |
| Jun 2009 | 2.5 million | Great Recession trough |
| Dec 2019 | 6.7 million | Pre-pandemic expansion |
| Apr 2020 | 4.6 million | COVID shock (brief) |
| Mar 2022 | 12.1 million | Post-pandemic peak (all-time high) |
| Nov 2025 | 7.1 million | Current: Controlled normalization |
Key Insight: We're Above Pre-Pandemic Levels
Despite a 41% decline from the March 2022 peak, current job openings (7.1M) remain 6% above pre-pandemic December 2019 levels (6.7M). This isn't a weak labor market—it's a normalizing labor market. The difference matters enormously for policy.
Annual Averages: The Long View
This annual view reveals the extraordinary nature of 2021-2022. Job openings averaged nearly 10 million in 2021 and over 11 million in 2022—almost double normal levels. The current average of about 7.4 million for 2025 represents a return to trend, not a collapse.
III. The Quits Rate: Worker Confidence Decoded
While job openings measure employer demand, the quits rate measures worker confidence. When people quit, they believe they can find something better.
The quits rate peaked at 2.9% in late 2021—the height of the "Great Resignation." Workers, flush with savings and confident about opportunities, quit jobs at unprecedented rates. Employers scrambled to retain talent, driving wages higher.
Today, the quits rate stands at 2.0%, back to pre-pandemic norms. Workers are staying put. Wage pressure is easing. This is the transmission mechanism the Fed was waiting for.
"A falling quits rate is disinflationary before it shows up in the CPI. It means workers have less leverage, which means wage growth will slow, which means services inflation will cool."
IV. Industry Breakdown: Where the Cooling Is Happening
Labor market cooling isn't uniform. Some industries have seen dramatic declines; others remain tight. This dispersion creates opportunities.
| Industry | Latest (K) | Peak (K) | Change |
|---|---|---|---|
| Total Nonfarm | 7,146 | 12,134 | -41% |
| Information (Tech) | 94 | 273 | -66% |
| Mining & Logging | 16 | 42 | -62% |
| Manufacturing | 403 | 1,001 | -60% |
| Financial Activities | 340 | 682 | -50% |
| Prof. & Business Svcs | 1,334 | 2,454 | -46% |
| Leisure & Hospitality | 995 | 1,790 | -44% |
| Trade, Transport, Utilities | 1,260 | 2,138 | -41% |
| Education & Health | 1,467 | 2,286 | -36% |
| Construction | 292 | 453 | -36% |
Tech Has Cooled the Most
The Information sector (which includes tech) has seen job openings decline by 66%—the most of any major sector. This aligns with the well-documented tech layoffs of 2023-2024. For tech workers and tech-exposed companies, the labor market has shifted dramatically from the hiring frenzy of 2021-2022.
V. Regional Perspective: A National Phenomenon
Is labor market cooling concentrated in certain regions, or is it truly national? The data shows broad-based normalization.
| Region | Latest (K) | Peak (K) | Change |
|---|---|---|---|
| South | 2,949 | 4,911 | -40% |
| Midwest | 1,542 | 2,595 | -41% |
| Northeast | 1,238 | 2,067 | -40% |
| West | 1,417 | 2,899 | -51% |
The West has seen the largest decline (-51%), driven by the concentration of tech employment in California and Washington. But all four regions show declines in the 40-50% range, indicating this is a national rebalancing, not a regional story.
VI. Fed Policy Implications
The Federal Reserve watches JOLTS closely. Here's why the current readings support their policy stance.
The Fed has been explicit: they need labor market "rebalancing" to bring inflation sustainably to 2%. JOLTS gives them what they need:
Labor demand declining
Wage pressure easing
No recession signal
This combination—cooling demand without rising layoffs—is the "soft landing" scenario. It gives the Fed room to continue cutting rates while maintaining confidence that inflation will stay controlled.
"JOLTS has become the most important labor report for rate expectations. A surprise in job openings moves the 2-year Treasury more than a surprise in payrolls."
— Fixed income strategist
VII. Company-Level Impact: Winners and Losers
Labor market cooling doesn't affect all companies equally. Impact depends on labor intensity, wage share of costs, and pricing power.
Negatively Impacted (Labor Cooling = Revenue Risk)
These companies rely on consumer spending that's sensitive to employment confidence:
| Company | Sector | Exposure |
|---|---|---|
| McDonald's (MCD) | Restaurants | High labor cost |
| Starbucks (SBUX) | Restaurants | Discretionary + labor |
| Target (TGT) | Retail | Middle-income consumer |
| Dollar General (DG) | Discount Retail | Low-income sensitivity |
Positively Impacted (Labor Cooling = Margin Expansion)
These companies benefit from wage moderation through improved margins:
| Company | Sector | Benefit |
|---|---|---|
| Walmart (WMT) | Retail | Scale + trade-down |
| Costco (COST) | Retail | Efficiency leader |
| Home Depot (HD) | Home Improvement | Pro customer focus |
| UPS (UPS) | Logistics | Labor cost relief |
| FedEx (FDX) | Logistics | Operating leverage |
Neutral / Mixed Impact
Tech giants and healthcare companies have labor exposure but strong pricing power:
| Company | Sector | Assessment |
|---|---|---|
| Microsoft (MSFT) | Technology | Pricing power |
| Apple (AAPL) | Technology | Capital intensive |
| UnitedHealth (UNH) | Healthcare | Regulated demand |
| Procter & Gamble (PG) | Consumer Staples | Brand pricing power |
Staffing Companies: The Direct Play
Staffing companies are directly tied to labor market conditions. When hiring slows, their revenue slows:
| Company | Focus | JOLTS Sensitivity |
|---|---|---|
| Robert Half (RHI) | Professional staffing | Very High |
| ManpowerGroup (MAN) | Temp staffing | Very High |
| Kelly Services (KELYA) | Workforce solutions | Very High |
The Staffing Barometer
Staffing stocks often lead JOLTS data because they see hiring slowdowns in real-time. If you're watching for the labor market to weaken further, staffing company earnings calls are an early warning system.
VIII. Investment Implications
"Labor market cooling without layoffs is the most equity-friendly outcome—but only for the right companies."
Tactical (3-6 Months)
- Overweight sectors benefiting from wage moderation (logistics, large-cap retail)
- Underweight labor-intensive discretionary segments (restaurants, small retail)
- Favor front-end duration (2Y-5Y Treasuries) as Fed continues cutting
Strategic (6-18 Months)
- Focus on companies with stable or declining employee growth
- Favor high free cash flow margins over revenue growth
- Quality and pricing power over pure growth exposure
IX. What to Watch
The labor market story isn't over. Here's what would change the narrative:
Bullish Signals
- Job openings stabilize at 7M+ level
- Quits rate holds above 1.8%
- Layoffs remain below 1.3%
- Wage growth moderates to 3.5%
Bearish Signals
- Job openings fall below 6M
- Quits rate drops below 1.5%
- Layoffs spike above 1.5%
- Initial claims surge above 300K
X. Conclusion
JOLTS doesn't tell us whether a recession is imminent. It tells us whether labor-driven inflation pressure is easing. In the current cycle, that distinction may determine whether markets continue to rerate higher—or reprice lower.
The data is clear: the labor market is cooling, not crashing. Job openings have fallen 41% but remain above pre-pandemic levels. The quits rate has normalized but layoffs haven't surged. This is the soft landing the Fed engineered and the market hoped for.
For investors willing to look beyond payroll headlines, labor market cooling offers not a warning, but a map—from macro signals to industry dispersion to firm-level opportunity.
The Bottom Line
JOLTS is signaling continued normalization, not deterioration. This supports the Fed's gradual easing path and favors companies with wage cost leverage over those with high labor intensity. Watch for job openings to stabilize in the 7-8 million range—that's the "Goldilocks" zone for both inflation and employment.
Explore the Data
Live Data Explorers
- → JOLTS Explorer — Full survey data by industry, region, and time
- → Employment Explorer — Nonfarm payrolls and industry employment
- → Local Area Unemployment — State and metro employment
Company Profiles
- Walmart • Costco • Home Depot
- UPS • FedEx • Amazon
- McDonald's • Starbucks • Target
Related Insights
- → What Strong Payrolls Mean for Markets — Sector-by-sector employment impact guide
- → Yield Curve & Bank Stocks — How rates affect financials
- → How Inflation Really Moves Stocks — CPI-component framework
Data & Methodology
Analysis based on BLS Job Openings and Labor Turnover Survey (JOLTS) data from December 2000 to November 2025 (300 monthly observations). All figures are seasonally adjusted. Industry and regional data based on BLS classifications. Company categorizations reflect labor intensity and business model exposure to wage dynamics. Historical context includes Great Recession (2008-2009), pandemic shock (2020), and post-pandemic normalization (2022-present).
Last updated: January 2026 | Data source: Finexus Database, BLS JOLTS