Labor Market Continues To Deteriorate: Job Openings Tumble, Fewest Hires Since 2014

Tyler Durden's picture

While many will be quick to ignore the May JOLTS report, due to its one-month delay behind the payrolls data and coinciding with an abysmal month when the US added only 11K seasonally-adjusted jobs, it does reveal several troubling points. First and foremost is that while Wall Street - which was already aware of the June payrolls number  - was expecting the number of job openings to decline modestly from 5.788MM, the drop was far steeper, albeit from an upward revised 5.845MM, sliding to 5.5MM, the lowest number of job openings since February, and the biggest monthly drop since October.


It wasn't just job opening which disappointed in May: so did the far more important, in our opinion, number of hires. In May, the BLS reported that the number of total hires was only 5.036MM, the third month in a row of declines, and the lowest print since November 2014 as suddenly employers clamped down on new (seasonally-adjusted) hiring.


The Hires series is important because historically it has been a good concurrent indicator of the trend in cumulative annual total payroll changes, although in this cycle something has broken, as the char below shows. That something is the Beveridge curve, shown below. However, no matter the breach in correlation, the recent slide in hiring is hardly a favorable outcome for the US jobs market.


Naturally, the flipside to reduced hiring at a time when overall payrolls are still rising, is a reduction in separations, and indeed in May, the number of total separations dropped from 5.015MM to 4.952MM, which meant that the Net Turnover between additions and separations was +84K in May, well above the total payrolls increase reported in the month of May of only 11K.

And then there is the "quits" series, or as Nick Colas from Convergex puts it, the "take this job and shove it" indicator. This too showed a troubling decline, and at just 2.895MM in people quitting in May, this was the lowest monthly print since January, suggesting that workers had less confidence in their ability to find a job, and thus prompted them to quit in smaller numbers.


Finally we conclude with our favorite chart which encapsulates all the trends revealed in the JOLTS report, namely the Beveridge Curve, which sadly continues to be broken. This is the BLS' explanation:

  • The graph plots the job openings rate against the unemployment rate. This graphical representation is known as the Beveridge Curve, named after the British economist William Henry Beveridge (1879-1963). The economy's position on the downward sloping Beveridge Curve reflects the state of the business cycle.
  • During an expansion, the unemployment rate is low and the job openings rate is high. Conversely, during a contraction, the unemployment rate is high and the job openings rate is low. The position of the curve is determined by the efficiency of the labor market. For example, a greater mismatch between available jobs and the unemployed in terms of skills or location would cause the curve to shift outward (up and toward the right).
  • From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From 2010 to the present, the series has been trending up and to the left as the job openings rate increased and the unemployment rate decreased.
  • I6, the unemployment rate was 4.7 percent and the job openings rate was 3.7 percent. This job openings rate corresponds to a higher unemployment rate than it did before the most recent recession.

Source: BLS

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slaughterer's picture

Could we finally do away with the "seasonal adjustments" and just see the hard numbers for once?

Dead Canary's picture

Oh Jesus titty fuckin CHRIST people! Just give me my $500 silver so I can retire to hookers and blow!

VinceFostersGhost's picture



Labor Market Continues To Deteriorate I'm getting confused.


Unemployment is really low but 1 in 5 households nobody has a job......something seems a little off.

Hohum's picture

Good idea.  But the unadjusted numbers are there for all of us to see.

Shizzmoney's picture

I am surprised the BLS hasn't made it a crime to look at the JOLTS chart.  

The economy is in the shitter.

ajkreider's picture

So, the jolts report show the economy is in the shitter?  I think you should look at, say, a 10 year chart of the data.

Bryan's picture

Well, I think the answer to this issue is obvious:  Print moar money.

Phillyguy's picture

Time for more CB $$ for more share buybacks.

credo's picture

Tech job postings are down 40% and nobody’s talking about it.


snakehead's picture

Pish. All Pyongyang has to do is send a couple into San Jose and Redmond.  Then there will be tech jobs available.

ajkreider's picture

That this shows a deterioration is premature.  Just like the May jobs report.  Let's see what June looks like.

FreeShitter's picture

Bullish.... we dont need no stinkin labor market when we have uncle ben and old yeller driving us into the iceberg.

Five Star's picture

I've said it before and I'll say it agian: average of 3.8 months between the period low in unemployment and a formal recession in the US

Falling Down's picture

I call bullshit for a variety of reasons, including the churn in the workforce due to high turnover.

The last company I worked for had high turnover, due to people quitting, and some good people let go for questionable reasons. Those let go for questionable reasons by companies won't show up in unemployment reports. My theory about this is companies are trying to game the unemployment systems here in the States.

When I signed up for benefits in their HR dept., lo and behold there was a Dept. of Labor survey sitting on her desk. Who's to say that a lot of companies don't fudge the numbers?

rejected's picture

My employer eliminated probably more than 60-70% of the workforce in the last 10-15 years and is still laying off. The area I am in used to have over 100 people. Now we have 7. Lots of maintenance is not being done because the time constraints and priority changes. 3 of our small group are going to be out for various reasons leaving 4. They are now in a state of subdued panic. They want to make us do all week on call and worse are considering cancelling vacations. What is not being discussed is hiring. Many of their buildings are crumbling and are unsanitary from complete cessation of maintenance and their once every month or two wipe down. Cleaning the lavatories consist of pouring some blue cleaner into the toilets and leaving.

No, these corporations have no intention of hiring and if they do it will likely be temporary. In my 55 years of working I have never seen anything like it. I am probably going to have to retire which will make it even worse for those that are left. I imagine temps will eventually take over positions that used to actually support families.

At this present time they're not concerned with real profits. Mostly they're doing stock buybacks and purchasing other companies only to bleed them. Management teams are now only interested in their bonuses and stock options. They go from one business to another destroying them as they pass through. They are like the Borg.

It's really a sad sight. I really pity the poor bastards that are going to have to go through this.

truthserum's picture

The low numbers jusy indicate the government isn't measuring jobs in the gigabit workforce. Some are 1099's, some are scavangers, uber, uship, amazon/ebay resellers, the list is seemingly endless ...

Hohum's picture

May is ancient history.  June is where it's at.