New data released Tuesday indicates that the pace of hiring across US businesses has slowed significantly, reaching its weakest level in 15 years, excluding the initial shock of the COVID-19 pandemic.

This slowdown suggests a considerable cooling within the labor market, occurring even before the recent escalation of the conflict in the Middle East began to exert pressure on the US economy.

Key Metrics Show Steep Decline in Job Creation

Hires Rate Hits Multi-Year Low

According to the latest Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics, hires as a percentage of total employment dropped to 3.1% by the end of February.

This figure represents the lowest hiring rate recorded since April 2020, and prior to that, the lowest level seen since 2011. The previous month, January, saw the rate at 3.4%.

Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab, noted that this one-month decline is the steepest observed outside of the pandemic period since 2016. She expressed concern, stating, “Which is concerning given the ongoing impacts of the conflict in Iran.”

Sectoral Pullbacks and Historical Context

The most significant reductions in hiring activity were observed within the construction sector and the professional and business services sector.

For historical context, the lowest recorded hires rate stands at 2.9%, which occurred in 2009 during the Great Recession.

Broader Labor Market Indicators Shift

Tuesday’s report also provided insight into other crucial labor market measurements, including job openings and voluntary separations.

Falling Job Openings and Rising Layoffs

The number of available job openings saw a dip, falling to an estimated 6.88 million from 7.24 million recorded in January. This metric is closely monitored as an indicator of labor demand.

Conversely, layoffs edged up to 1.72 million from 1.66 million the prior month. However, the overall rate of layoffs relative to total employment remains consistent with averages seen in recent years.

Worker Confidence Declines

Voluntary quits, often used as a gauge of worker confidence in securing new employment, also decreased in February. The number fell to 2.97 million, marking the lowest level recorded since 2020.

Economic Implications and External Pressures

The combination of sluggish hiring and companies potentially retaining staff (labor hoarding) means the essential “churn” necessary for a robust labor market and healthy economy has nearly ceased.

These figures follow the February jobs report, which indicated the US economy shed an estimated 92,000 jobs that month, intensifying worries that the labor market is deteriorating rather than merely stalling.

Elizabeth Renter, senior economist at NerdWallet, highlighted how external events are compounding these concerns. She noted that the escalating Middle East conflict is amplifying existing fears.

Renter explained that rising uncertainty, coupled with potential energy shocks and material shortages, forces companies to address immediate tangible effects. These include managing the higher cost of living impacting both their workforce and their customer base. She concluded, “If their input costs rise, they may be forced to reckon with tough decisions such as raising prices or reducing hours and workforce,” she wrote Tuesday.