Wednesday, November 8, 2017

September JOLTS report: hurricanes do not disrupt late cycle trend

 - by New Deal democrat

Take yesterday's JOLTS report with an extra grain of salt, as it was affected (particularly in the South census region -- more on that later) by Hurricanes Harvey and Irma.

That being said, the disconnect between the "soft data" of openings in this survey and the "hard data" of actual hires and discharges continues. As I have pointed out many times, openings can be just chumming the water for resumes, or even laying the groundwork to hire foreign workers. The disconnect betrays an unwillingness to pay new hires more, or to engage in on the job training.

In September. openings continued to run about 10% higher than actual hires, which have been basically flat for the last year:

To reeiterate, the major shortcoming of this report is that it has only covered one full business cycle. In that cycle, hires peaked and troughed before separations: 

Further, hires stagnated, and shortly thereafter involuntary separations began to rise, even as quits continued to rise for a short period of time as well:


[Note: above graphs show quarterly data to smooth out noise]

Here are hires vs. separations on a monthly basis for the last several years:

Once again for this report, even while quits remain at expansionary high levels, involuntary separations bottomed a year ago, and have risen  on a quarterly basis ever since.  Here's the monthly view of the last several years: 

Finally, because September data has all been affected by the hurricanes, the BLS attached a note explaining that they made no special adjustments, and that the data is not broken up by states, so it is impossible to know the precise impact. But because the data is broken down by Census Region, we can exclude the Southern Region and see what was going on in the rest of the country, which was not affected.  I've prepared that for openings, hires, quits, and layoffs and discharges below (and helpfully marked the expansion highs (low for layoffs)  with an "H" (and "L") symbol): 

MonthOpeningsHires   QuitsLayoffs/
9/16 35953158213 975
5/17   36403350 237 922 L
6/17 38823224219 1078
7/17 38973416 H253 H1113
8/17 3965 H32532501127
9/17 3935 3174 2471070

The "soft data" openings have remained very close to their high of one month ago, while quits are down a little more  (about 2%) from their recent highs, but hires are down significantly from their recent high (about 7%) and up only slightly (less than 1%) from one year ago.   Meanwhile layoffs and idscharges declined significantly compared with the last several months, but remain substantially higher  than they were one year ago. 

There is nothing in yesterday's data that portends any imminent recession, but on the other hand, it continues the slew of data that says we are late in the cycle.