As Job Openings Plunge By Most Since May 2010, Beveridge Curve Goes Berserk
The BLS April JOLTS survey was released earlier and it was ugly - of particular attention was the number of "job opening" which collapsed from 3.741MM to 3.416MM, a drop of 325,000, which just happens to be the biggest decline since May 2010. It is also the 6th largest drop in history as the second chart below from John Lohman shows. Adding to the dire jobs picture was the New Hires number which dropped by 160,000, the biggest sequential drop since April 2011, and finally separations, which after months of increases (remember: more separations is a good thing supposedly, meaning people are confident they can find better paying jobs elsewhere), had their biggest drop by 81,000, also the most since April 2011.
April JOLTS summarized:
And in context:
Some more perspectives from Stone McCarthy:
The level of job openings in April fell 325,000, a sharp
declined to 3.416 million. Job openings in government (-42,000) and
private industry (-282,000) were both steep. To some extent the drop is
also the product of seasonal factors that shifted some strength into
February and March, but it does point to a loss of momentum. Government
entities continue to slash jobs on budget constraints.
The number of new hires in April fell 160,000 to 4.175 million. It was almost entirely due to a drop in private sector (-159,000) hires. Government hiring declined only narrowly (-1,000), and was perhaps less effected by weather impacts. The biggest declines were in professional and business services (-34,000), education and healthcare (-35,000), accommodation (-34,000) and leisure and hospitality (-62,000). Industries that normally hire somewhat later in the spring got a jumpstart in March.
Net turnover -- new hires less separations -- has lost momentum in the last two months. It points to more sluggish growth for payrolls in the coming months. The rate of net turnover appears to be falling due to increased layoff activity, as well as softness in hiring. Low layoff activity had been supporting higher readings for net turnovers, but that trend may be fading. Unless new hiring picks up, net turnovers may not be able to sustain the decent readings of the prior 10 months.
Finally: a look at the Beveridge curve:
The Beveridge Curve suggests that structural unemployment has increased compared to the longer historical context, but that it is less entrenched than it was a year or two ago and moving lower. Greater structural unemployment suggests that NAIRU may be higher than previous notions of 5% or so, and the potential GDP trajectory could also be lower than previously thought. Recent updates to the FOMC forecast are looking for somewhat slower growth and a modest outlook for the unemployment rate. The FOMC now forecasts the longer-run unemployment rate at about 5.2% to 6.0%, and the change in real GDP at about 2.3% to 2.6%.
So... the NEW FLOW QE?