JOLTS: Job Openings Drop To Lowest In Six Month As Hiring, Quitting Slows

After a burst of record high job openings which started in June but declined in October, today's November JOLTS report  - Janet Yellen's favorite labor market indicator - showed another modest drop in job openings across most categories as the year wound down, with the total number declining from a downward revised 5.925MM to 5.8793MM, well below the 6.038MM consensus estimate, and the lowest since May, resulting in an Nov. job opening rate decline from 3.9% to 3.8%.

After the recent breakout, which started with the near record 414K monthly spike in job openings in June after years of being rangebound between 5.5 and 6 million, the latest job opening prints suggests that increasingly more vacant jobs are getting filled, although it is unclear if that is due to higher wages or looser employer standards. In any case, the fact that job openings is dropping is likely another modest negative for future wage growth.

 

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The number of job openings was little changed for total private and for government. Job openings increased in retail trade (+88,000) but decreased in other services (-64,000), transportation, warehousing, and utilities (-60,000), and real estate and rental and leasing (-39,000). 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 tests...

It wasn't just job openings that declined: total hires declined as well, dropping from a near record 5.592 million in October to 5.488 million in November. This is roughly the same as the May print of 5.472 million.

 

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On an annual basis, the pace of hiring declined modestly from October's sharp 7.5% jump to 4.3% in November, in line with recent historical averages.

 

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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 increase, and in November declined modestly from 3.187MM to 3.174MM, suggesting workers were feeling just a little less confident about demand for their job skills than the previous month. The number of quits was little changed for total private and increased for government (+25,000). Quits increased in transportation, warehousing, and utilities (+25,000) and state and local government, excluding education (+15,000). Quits decreased in other services (-49,000), real estate and rental and leasing (-21,000), and mining and logging (-6,000).

 

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And with a total 5.2 million separations (a 3.5% rate), this means that there were 1.7 million layoffs and discharges in November, virtually unchanged from October. The layoffs and discharges rate was 1.1 percent in November, down from 1.2% in the prior month.  The number of layoffs and discharges was little changed for total private, for government, and in all industries. The number of layoffs and discharges decreased in the Midwest region.

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 5.9 million open jobs on the last business day of November 2017.
  • Hires have increased since a low in June 2009 and have surpassed prerecession levels. In November 2017, there were 5.5 million hires.
  • Quits have increased since a low in September 2009 and have surpassed prerecession levels. In November 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 November 2017, there were 391,000 fewer hires than job openings.

 

 

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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 November 2017, the unemployment rate was 4.1% and the job openings rate was 3.8%.

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