Job Openings, Hires, Quits All Tumble As Labor Market Hits Unexpected Air Pocket

After the Job Openings and Labor Turnover Survey (JOLTS) reported record prints for virtually every notable labor market series in the late summer, there has been a notable slowdown in the labor market, and according to the BLS, after an upward revision in the October job openings from 7.079MM to 7,131MM, in November this number tumbled by 243K to 6.688 million, the lowest number since last June.

Despite the decline in job openings, this will still be the 9th consecutive month in which there were more job openings then unemployed workers: considering that according to the payrolls report there were 6,294MM unemployed workers in December, there is now just under 600K more job openings than unemployed workers currently, (how accurate, or politically-biased the BLS data is, is another matter entirely).

In other words, in an economy in which there was a perfect match between worker skills and employer needs, there would be zero unemployed people at this moment (of course, that is not the case.)

According to the BLS, the number of job openings decreased for total private (-237,000) and was little changed for government. Job openings increased in transportation, warehousing, and utilities (+40,000). The job openings level decreased in a number of industries, with the largest decreases in other services (-66,000) and construction (-45,000). Job openings fell in the West region

Adding to the unexpectedly downbeat labor picture, as job openings tumbled, the number of total hires also slumped, sliding by 218K November, and printing at 5.710 million. Hires fell for total private (-236,000) and was little changed for government. Hires increased in federal government (+8,000) but decreased in professional and business services (-167,000). The number of hires decreased in the South region. According to the historical correlation between the number of hires and the 12 month cumulative job change (per the Establishment Survey), the pace of hiring right now is precisely where it should be relative to the cumulative change in hiring.

In light of the softest JOLTS report in many months, recall what we said in our December discussion of the JOLTS report:

while both job openings and hires showed continued strength in the labor market, by one metric the job market may have peaked: the so-called "take this jobs and shove it" indicator - which shows worker confidence that they can leave their current job and find a better paying job elsewhere - dipped for a second consecutive month, declining by 50K in October, after dropping 84K in September from an all time high of 3.648 million, suggesting the workers on the margin are somewhat less reluctant to quit their jobs and look elsewhere.

Well, this trend persisted in November, when the number of Quits declined by 112K, its third monthly drop in a row, the longest such stretch since late 2014, and was down to just 3.407 million, the lowest number of people quitting their jobs since April. The quits level edged down for total private (-122,000) and was little changed for government. Quits fell in professional and business services (-84,000) and in accommodation and food services (-62,000).  This confirms that there has been a notable weakening in the labor market as increasingly fewer workers are confident they can find better employment terms elsewhere, or said otherwise, "the grass isn't greener" this time.

Putting all this in 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 6.9 million open jobs on the last business day of November 2018.
  • Hires have increased since a low in June 2009 and have surpassed prerecession levels. In November 2018, there were 5.7 million hires.
  • Quits have increased since a low in September 2009 and have surpassed prerecession levels. In November 2018, there were 3.4 million quits.
  • For most of the 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 2018, there were 1.2 million fewer hires than job openings.

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