Friday, June 10, 2016

April JOLTS report: mature cycle deceleration, again

 - by New Deal demorat

Wednesday's JOLTs report (note: for April) gives us a more granular look at the jobs market.  For most of the last 12 months I have noted that the pattern was similar to that in late in the last expansion, and the April report was more of the same.

First, here is a comparison of job openings (blue) and hires (red).  Because there is only one compete past business cycle for comparison, lots of caution is required. But in that cycle, hires peaked first and then openings continued to rise before turning down in the months just prior to the onset of the Great Recession:

The same pattern shows up in the YoY comparisons, where actual hires turned flat well before YoY openings declined to zero:

So far 2016 looks very much like 2006.

After making a new post-reession record three months ago, quits have since fallen back at their late 2015 level.  For comparison, in the last cycle, quits made a high in November 2006 as indicated below:

On the one hand, the increasing trend over the last several years of Quits appears intact. On the other hand, the pullback of the last few months is consistent with the 2006 or early 2007 flatness in the last cycle.
Quits (blue) also appear very consistent with, and to slightly lead, the unemployment rate (red):

If the uptrend in Quits continues, then we should expect a continuing decline in the unemployment rate.  If on the other hand the recent pullback is establishing a new flat (or worse!) trend, then the unemployment rate has probably made its cycle low.  Unfortunately, I suspect that the latter, rather than the former, is more likely the case.

In summary, the JOLTS reports have been adding to the accumulating evidence that we are getting late in the
 expansion, but on the positive side, if we follow the 2001-07 template, there is stll another 6 - 24 months to go of jobs growth.