In previewing today's JOLTS data, Bloomberg writes that it "is likely to matter more for investors than FOMC minutes later today" as the last three prints have led to a pop in stocks after the first five minutes, with tech underperforming alongside a rise in yields and the dollar. The exception is the last print, which boosted stocks but did not translate to the bond market. As a reminder, the last reading shocked to the upside with job openings hitting a fresh record of 9.3 million, illustrating that enhanced unemployment benefits have indeed depressed employment.
As Bloomberg adds, depending on today’s number, "either last month’s print can be dismissed as a one-off or we will get further evidence of a problem that could hinder the next steps of recovery. There are two possible readings. The first is that unfilled job openings mean the Fed can keep deferring taper talk, which would be risk-positive. However, if the labor market faces a disconnect between hirers and workers, that could be inflationary."
With that in mind, moments ago the DOL reported that in May (which as a reminder is extra delayed since JOLTS is one month behind the jobs report) we got more of the same, with job opening hitting a record 9.209MM, slightly below the expected 9.325MM. But how is this a record since last month the number was 9.286MM? Simple: the DOL revised the April print lower to 9.193MM, making the May print the highest on record. That said, unlike last month's record surge which saw 905K new job openings added, in May job openings rose my a much more modest 16K.
The record number of job openings stands out in stark contrast against the near record number of Americans who are still collecting various pandemic emergency unemployment claims, which in the latest week was just above 11 million.
Looking at the details, the increase in job openings was driven by a number of industries with the largest increases in other services (+109,000), state and local government education (+46,000), and educational services (+35,000). The number of job openings decreased in arts, entertainment, and recreation (-80,000); state and local government, excluding education (-56,000); and federal government (-17,000). The number of job openings was little changed in all four region
Separately, in yet another indication of the record surge in demand for labor since the collapse last April when there were 18.1 million more unemployed workers than there are job openings - the biggest gap on record - the gap has since shrunk dramatically to just 107K in May, down from 619K in March. Yes: despite the covid shock, there are just one hundred thousand more unemployed people than there are job openings!
As a result, there has been even more continued improvement in the job availability series, and in May there were just 1.01 unemployed workers for every job opening, down from 1.06 in April, 1.19 in March, and from 4.6 at the peak crisis moment last April.
At the same, a sign that the acceleration in the hiring picture as covid lockdowns were lifted may have peaked, in May hiring posted a modest decline, with total hires dropping modestly from 6.012MM, in April to 5.927MM in May, the lowest since February.
According to the BLS, hires decreased in state and local government, excluding education (-56,000) and in federal government (-10,000).
Curiously, as hires dipped, so did the number and rate of total separations which decreased to 5.3 million (-485,000): total separations level decreased in four industries, with the largest decreases in professional and business services (-192,000); transportation, warehousing, and utilities (-53,000); and state and local government education (-42,000).
Finally, and in a sign that the overheating in the labor market appears to be coming to an end, in May the level of quits - or people leaving their job voluntarily due to better prospects elsewhere - posted its biggest decline since the peak of the covid crisis, as it plunged by a whopping 388K to 3.604 million, dropping from a record 3.992 million, after rising by 424K and 185K in the previous two months. The number of quits increased in a number of industries with the largest increases in retail trade (+106,000), professional and business services (+94,000), and transportation, warehousing, and utilities (+49,000).