There was nothing to smile about in today's May JOLTS release from the BLS. Those expecting a pick up in job openings (traditionally the key requirement for an sustained increase in NFP) will have to wait some more, after the May number came at 3.0 million, the same as April. This is modestly better than the all time low of 2.1 million in July 2009, but is a far cry from the 4.4 million when the Depression started. And while there was no good news in Job Openings, there was some bad news in Total Separations which increased by over 200K sequentially from 3.833 MM to 4.059 MM. And for the first time since late 2010, the separations rates (defined to include voluntary quits, involuntary layoffs and discharges) rose to 3.1%, the same as the hires rate. Should the separations rate (especially if driven by involuntary departures) surpass the hires rate it will likely portend another period of NFP weakness ahead. What is most surprising is that contrary to conventional wisdom, the voluntary quits level among government workers increased from 38% to 41% of total, while the layoffs and discharges level dropped from 44% to 38%, which means that government workers were not "let go" - they left voluntarily. This throws a bit of a wrench in generic interpretations of the surge in the government component of the unemployment rate. What is worse is that the quits rate in the Private employment stayed flat at 50%, while the layoff and discharges rate increased from 42% to 44%. Ironically, it is Private workers who are getting fired more, while it is government workers who are quitting voluntarily.
Monthly big picture summary:
Drilling down into the key Separations number:
The quits rate can serve as a measure of workers’ willingness or ability to change jobs. In May, the quits rate was essentially unchanged for total nonfarm (1.5 percent), total private (1.7 percent), and government (0.6 percent). (See table 4.) Although the number of quits rose from 1.5 million in January 2010 (the most recent trough) to 2.0 million in May 2011, the number remained below the 2.8 million quits when the recession began in December 2007.
The number of quits (not seasonally adjusted) in May 2011 was higher than 12 months earlier for total nonfarm, total private, and government. Several industries experienced a rise in the number of quits over the year, and federal government experienced a decline. In the regions, the number of quits rose in the South but was little changed in the other three regions. (See table 8.)
The layoffs and discharges component of total separations is seasonally adjusted only at the total nonfarm, total private, and government levels. The layoffs and discharges rate was little changed in May for total nonfarm, total private, and government. The number of layoffs and discharges for total nonfarm was 1.8 million in May, up slightly from the recent low point of 1.5 million in January 2011, but still well below the peak of 2.5 million in February 2009. (See table B below.)
The layoffs and discharges level (not seasonally adjusted) was essentially unchanged over the 12 months ending in May for total nonfarm and total private. The level decreased over the year for federal government, returning to a more typical level after a large number of layoffs in May 2010 of temporary Census workers. The number of layoffs and discharges was steady in the regions. (See table 9.)
And looking at relative contributions:
The total separations level is influenced by the relative contribution of its three components—quits, layoffs and discharges, and other separations. The percentage of total separations attributable to the individual components has varied over time at the total nonfarm level, but for the majority of the months since the series began in December 2000, the proportion of quits has exceeded the proportion of layoffs and discharges. Other separations is historically a very small portion of total separations; it has rarely been above 10 percent of total separations.
The proportions of quits and layoffs and discharges were last equal in November 2010. Since then, the proportion of quits has trended upward, again exceeding the proportion of layoffs and discharges, which has trended downward. In May, the proportion of quits for total nonfarm was 49 percent and the proportion of layoffs and discharges was 44 percent. The proportions were similar for total private with 50 percent quits and 44 percent layoffs and discharges. For government, the proportions were 41 percent quits and 38 percent layoffs and discharges. (See table C below.)