- by New Deal democrat
The JOLTS survey parses the jobs market on a monthly basis more thoroughly than the headline employment numbers in the jobs report. It also is a slight leading indicators for both initial jobless claims and unemployment; and for forecasting wage growth as well.
Like many other statistics concerning jobs, the JOLTS series have been deceleration for several years. The question now is whether they level off or continue to decelerate towards outright declines in net job creation.
In October, the data was mixed. The soft statistic of job openings as well as the hard data of quits and also layoffs and discharges were positive, while actual hires declined. The below graph norms the series above (expect for quits) to 100 as of just before the pandemic:
Both actual hires, as well as quits, turned weaker than their pre-pandemic levels a little more or less than one year ago respectively. Openings remain higher but continue their decelerating trend as well.
Showing the same data as YoY% changes tells us that there has been no significant change in the decelerating trend:
In other words, there is no evidence that these metrics have begun to level off.
To show the longer historical trend, I have normed each of these series by the prime age population level, and also normed to zero as of their current readings, below:
None of these are actually negative, but hires in particular are mediocre compared to their performance since the turn of the Millennium, while quits remain at pretty robust rates. Job openings have softened but are confounded by their long term inflating trend that mainly shows changes in how businesses handle purported vacancies.
The best news in October was that after rising sharply due to hurricanes in September, layoffs and discharges retreated back into their range for the previous year. This is of a piece with the decline in initial jobless claims during November back to their previous range as well:
This may translate into a decline in the unemployment rate in Friday’s report for November as well.
Finally, the quits rate (blue in the graph below) has a record of being a leading indicator for YoY wage gains (red):
The quits rate stabilized earlier this year, before resuming its decline from June through September. This month, as you can see, the rate jumped again, but is likely just noise:
Despite the positive news on the quits rate this month, the likelihood is that on a YoY basis wage gains will continue to decelerate as well. If inflation stabilizes or picks up again, this could create a problem next year. The same could be said for the overall picture of the JOLTS data: no problem now, but if the trend continues, possibly a big problem by later next year.
