Labor Market JOLTed: Rate Of Hiring Suffers Biggest Drop In 4 Years

While too backward looking to be actionable (reflecting the labor situation with a 2 month delay) especially in a time when everyone is focused on the future - or lack thereof - of Trump's fiscal policies today's JOLTs report failed to capture the sharp slowdown in the March jobs report, instead corroborating the last of the "good" payroll prints, that of February.

So what did "Janet Yellen's favorite labor market indicator" show? 

First the good news: after flatlining for the previous six months, job openings had the biggest monthly increase since September, rising by 118K to 5.743 million, from 5.625m in January, and higher than expected. As a result, the job opening rate (job openings as a % of total employment plus openings) rose modestly to 3.8% from 3.7% prior month.

And while America's millions of job openings remain unfilled (the highest number was in educational and health services, followed by professional and business services), a more troubling trend could be observed in the one chart that actually matters from a so-called job "flow" perspective, hiring.

The BLS reported that in February, the number of Americans hired dropped to 5.314 million, sliding by 110K or the biggest monthly drop since April.

Putting the above chart in a more troubling light was the Y/Y % rate of change: as shown in the chart below, not only did the rate of hiring not rise over the past year, but in February it declined by 3.6% relative to last year. This was the biggest decline in the annual rate of hiring in over four years, going back to March 2013.

Which leads to our favorite chart: hiring vs payrolls. Has the long overdue inflection point finally arrived, and will the slowdown in hiring finally pull down the number of actual net jobs added?

Last but not least was that other key indicator, the "quits" rate, or the "take this job and shove" it metric according to Convergex' Nick Colas. As a reminder, Americans only quit their jobs when they are confident they can find a better paying job elsewhere, and last month we saw the number of quits rising to the highest level in 16 years. Well, in February not only was the January number revised lower, but the February quits number also dropped by some 102,000, undoing the January gains, and the biggest monthly drop in the quits rate since January 2016, suggesting that suddenly Americans are notably less confident about better job prospects out there.

If all this took place during February, when the payroll report was seen as extremely positive, we can only imagine what the March JOLTs report will look like next month.

Source: JOLTS


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