On the surface today's JOLTS report was good: in fact, for some it was great because the one item that everyone automatically looks for, the number of job openings rose once more, surging to 5.133 million in February (recall that JOLTS is one month behind the most recent NFP report). This was the highest since January 2001.
Looking at the internals, something Janet Yellen is sure to do as the JOLTS is supposedly her favorite labor market indicator, however showed some other aspects of a job market that were hardly encouraging.
First, unlike in previous years, the BLS has managed to coordinate the two data sets - the payrolls and the net turnover (hires less separations) - into a coherent picture. This is what the latest data looks like when reconciling the NFP report and the JOLTs: again, it looks largely as it should.
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As a reminder, it was Zero Hedge who back in September 2013 caught the BLS fabricating either NFP or JOLTS data, when the drift between the two data series soared to a record cumulative 200K [6], and which the BLS had no choice but to "fix" with a major data revision.
The divergence in the two data series, historically convergent, was seen highlighted on the chart below:
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We are happy that the BLS has remembered to keep track of these two goalseeked series as repeat embarrassments would not look good for the agency which even the Fed says has lost credibility.
Which brings us to the most important data point of all: hires. As the following chart shows, whereas in the past the total number of hires tracked the cumulative 12 month change in jobs tick for tick, this time is has failed to do so, and as the chart below shows, the hires rate - a leading indicator - has dropped sharply, and at 4.916MM was not only the lowest since August...
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... but also represents the biggest two-month drop since Lehman!
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Again, keep in mind this is part of that whopping February jobs report which came in far stronger than expected. We already know the March jobs data was abysmal, so one can be sure that Hires in March continued the downward trajectory and the worst trend since Lehman will be confirmed in one month's time.
And the second part of today's JOLTS bad news: the number of separations tumbled to 4.650MM, down from 4.834MM last month, and back to November 2014 levels. And while discharges dropped to 1.591MM, in line with November, it was the drop in Quits that will be troubling, as this is the one indicator which all those who had promised a surge in wages is imminent. After all, one quits a job if one has something better in store. Well, the number of Quits also dropped to the lowest since November, suggesting that the opportunities for well-paying jobs in America's job market just dropped.
In short: while one can kiss any hopes for a wage rebound in the coming year goodbye, it is the plunge in the hires that is the biggest flashing red light in today's JOLTS data.... and, paradoxically, may well be the catalyst of today's stock ramp, because as even the shoeshine boy knows, the worse the news for the economy, the better it is for stocks.
