After a burst of record high job openings which started in June and eased modestly in August, today's September JOLTS report - Janet Yellen's favorite labor market indicator - showed another modest increase in job openings across most categories in the hurricane-affected month, with the total number rising fractionally 6.090MM to 6.093MM, above the 6.091MM estimate, resulting in an unchanged Sept. job opening rate of 4%. Still, after nearly two years of being rangebound between 5.5 and 6 million, the latest job openings number confirms that there may be a "breakout" about what was the previous resistance level, as increasingly more jobs remain unfilled in a labor market where skill shortages and labor imbalances are becoming structural.
The number of job openings was little changed for total private and for government. Job openings increased in professional and business services (+156,000), other services (+52,000), state and local government education (+36,000), and federal government (+15,000). Job openings decreased in accommodation and food services (-111,000) and information (-28,000). The number of job openings was little changed in all four regions. Now if only employers could find potential employees that can pass their drug test...
Comment on the impact from the hurricanes, the BLS said that "Hurricane Irma made landfall in Florida during September, the reference month for the preliminary estimates in this release. All possible efforts were made to contact and collect data from survey respondents in the hurricane-affected areas. A review of the data indicated that Hurricane Irma had no discernible effect on the JOLTS estimates for September."
One notable change in this report was the sharp slump in hiring, which declined by 147K to 5.273MM in September, the lowest month since April, and further reducing the hiring rate from 3.7% to 3.6% percent.
On an annual basis, the pace of hiring slowed down once again, declining to 1.8% in Sept. from 2.5% Y/Y in August, down from 3.6% in July.
The other closely watched category, the level of quits - which indicates workers' confidence they can leverage their existing skills and find a better paying job - reversed last month's declined, and in Sept. rose from 3.093 MM to 3.182MM, suggesting workers were feeling just a little more confident about demand for their job skills than the previous month. The number of quits was little changed for total private and for government. Quits rose in professional and business services (+82,000) and state and local government, excluding education (+10,000). Quits fell in other services (-45,000) and real estate and rental and leasing (-16,000).
And with a total 5.2 million separations (a 3.6% rate), this means that there were 1.7 million layoffs and discharges in September, unchanged from August. The layoffs and discharges rate was 1.2 percent in Sept. The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level decreased in wholesale trade (-30,000) and mining and logging (-7,000). The number of layoffs and discharges was little changed in all four regions.
Putting all the data in context:
- Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.1 million open jobs on the last business day of September 2017.
- Hires have increased since a low in June 2009 and have surpassed prerecession levels. In September 2017, there were 5.3 million hires.
- Quits have increased since a low in September 2009 and have surpassed prerecession levels. In September 2017, there were 3.2 million quits.
- For most of JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.
- At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In September 2017, there were 820,000 fewer hires than job openings
Finally, and perhaps most notably, the Beveridge Curve (job openings rate vs unemployment rate), appears to be gradually normalizing after a nearly decade-long "drift" from its conventional pattern. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. In Sept 2017, the unemployment rate was 4.2% and the job openings rate was 4.0%.