Moments ago the BLS reported Janet Yellen’s favorite labor market indicator, the JOLTS survey, which as expected (since it tracked the far stronger than expected July payrolls) showed that in July the number of job opening rebounded from the June drop to 5.643 million, jumping by over 200K jobs to a new all time high of 5.871 million, nearly 300K more than the 5.580 million expected.
The June job opening rate (job openings as a % of total employment plus openings) rose to 3.9% vs 3.8% prior month, with the greatest number of job openings in the professional and business services sector at 1.27 million, followed by education and health with 1.078 million, and trade, transportation and utilities in third place with 1.030 million.
The number of unemployed workers per job opening has dropped to 1.35. When the most recent recession began (December 2007), the number of unemployed persons per job opening was
1.9. The ratio peaked at 6.6 unemployed persons per job opening in July 2009 and has trended downward since.
Job openings declined to a series low in July 2009, one month after the official end of the most recent recession. Employment continued to decline after the end of the recession, reaching a low point in February 2010.
And yet despite the record number of job openings, the pace of hiring has failed to keep up. The BLS reported were 5.2 million hires in July 2016 approaching prerecession levels. Total separations are near their prerecession levels, at 4.9 million in July 2016.
The number of hires has exceeded the number of job openings (measured only on the last business day of the month) for most of the JOLTS history. Since February 2015, this relationship has changed as job openings have outnumbered hires in most months, suggesting that the pace of hiring has slowed down disproportionately.
Indeed, on a Y/Y basis, the pace of hiring has clearly slowed down, prompting some to wonder if without a renewed hiring push the US labor market will not soon stagnate.
Quits, which are generally voluntary separations initiated by employees, continue to rise. As a result, 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 JOLTS history. During the latest recession, this relationship changed as layoffs and discharges outnumbered quits from November 2008 through March 2010. In July 2016, there were 3.0 million quits and 1.6 million layoffs and discharges.
Putting all the key numbers in context, total private job openings have increased since their low in July 2009. They returned to their prerecession level in March 2014 and surpassed their prerecession peak in August 2014. There were 5.4 million open jobs in the private sector on the last business day of July 2016. Hires in the private sector have increased since their low in June 2009 and are near their prerecession levels. In July 2016, there were 4.9 million hires. Quits in the private sector have increased since their low in September 2009 and are near their prerecession levels. In July 2016, there were 2.8 million quits.
Finally, taking a look at the distroted Beveridge Curve, which plots the job openings rate against the unemployment rate, shows that 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. From 2010 to the present, the series has been trending up and to the left as the job openings rate increased and the unemployment rate decreased. In July 2016, the unemployment rate was 4.9 percent and the job openings rate was 3.9 percent. This job openings rate corresponds to a higher unemployment rate than it did before the most recent recession.
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