Will A Hawkish Janet Yellen Be JOLTed By Most Job Openings Since 2001?

Now that even the Fed has admitted the BLS' nonfarm payroll and unemployment rate are meaningless due to the "noise" from a record number of workers dropping out of the labor force, Janet Yellen is left with one fallback "favorite" indicator, the JOLTS survey (Job Openings and Labor Turnover). It is here that something rather unexpected just happened, when moments ago the BLS reported that US employers reported a whopping 4671K job openings in the month of June, beating expectations of a 4.6MM print and well above the downward revised 4,577K in May. This was the highest openings print since February 2001, and one which suddenly puts the "hawkish" Janet Yellen back in play as it suggests that slack in the labor market, at least based on the number of job openings, has not only filled the gap, but it is now overflowing!


Another way of showing the delta between hires and quits, and the rising Openings delta. One can only hope the green-lined data is credible.


Some more good news: layoffs are declining while quits are rising.

As the BLS reminds us, Quits are generally voluntary separations initiated by employees. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. The number of quits has exceeded the number of layoffs and discharges for most of the 12-year JOLTS history. During the latest recession, this relationship changed as layoffs and discharges outnumbered quits from November 2008 through March 2010. In June 2014, there were 2.5 million quits, still below the 2.8 million quits in December 2007, the first month of the recession.

Some other observations from JOLTS:

  • The ratio for health care and social assistance remains above 1.0 throughout the business cycle and for the history of JOLTS. The high ratio suggests a need for workers as evidenced by constant voluntary turnover and few layoffs and discharges.
  • The ratio for manufacturing goes above and below 1.0 across the business cycle, indicating that both quits and layoffs and discharges in the industry depend on the economy.
  • The ratio for construction is below 1.0 for nearly every month in the JOLTS history, indicating that layoffs and discharges are more common than quits in this industry as workers are routinely laid off as projects are completed, and then rehired elsewhere for new projects.

It was not all good news, though, and as the following chart focusing solely on the number of hires shows, the pace of hiring news workers is still woefully low compared to where the level of Payrolls suggest it should be.

Still what JOLTS really shows is that the NFP prints of the past few months was roughly in line as defined by the Net Turnover statistic, which is Hires less Separations. Here, June is said to have experienced 283K new jobs compared to 298K based on the establishment survey, which simply confirms that one series is a seasonally adjusted goalseeked indicator for the other.


Then again, since Yellen has no desire to raise rates, we wouldn't be surprised if Yellen were to actually go through our archives in order to reduce the impact of the JOLTS data next (now that the unemployment rate is meaningless) and find the following post: "This Is What Happens When The Bureau Of Labor Statistics Is Caught In A Lie."

It was here where we showed nearly a year ago that JOLTS (and BLS) data for that matter is nothing but a monthly exercise in goalseeked fabrication.To wit:


For now however, the question of the day is: will Yellen be JOLTed out of her dovishness based on the latest job openings data?


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