There are two important reports on the U.S. labor market worth mentioning this morning. First, initial claims for unemployment benefits ended last week at 216K, according to new data from the Bureau of Labor Statistics. That is a decrease of 17K from the prior week and the 201st sub-300K print in a row. The fact that weekly jobless claims are only fractionally above the half-century low (202K) hit earlier last year highlights just how quickly the labor market is still able to absorb new entrants (job seekers). Moreover, claims starting 2019 off this low is especially encouraging given the additional headwinds of post-holiday separations and 350,000 furloughed government workers. Although the streak of improving claims figures will not last forever, incoming data continue to provide no warning signs.
Elsewhere, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics showed that there were 6.888 million job openings in America in November (lagged release). That was a larger than expected decrease from October’s upward-revised print and the lowest reading since June. Hiring also contracted in November, but this will only become more common this late in the economic cycle as any remaining slack is removed from the labor market. More importantly, the number of job openings in November exceeded total hires for the 22nd month in a row, and employment vacancies outnumbered out-of-work Americans by 870,000. Both of those figures are historic extremes and highlight the difficulties U.S. businesses are having when trying to find qualified applicants for their vacant positions. Despite the clearly tight labor market, the ratio of quits to layoffs and discharges, an indicator of Americans’ willingness to give up their current job security for better employment opportunities, fell to a 1-year low in November. Although still at a historically strong reading, the latest decline in the quits ratio could suggest that a growing number of workers have become unsure about how long the favorable labor market will last. Another potential factor, though, is the recent acceleration in wage growth, which has likely caused more workers to postpone exploring other options.
Sources: Econoday, U.S. DoL, Bloomberg, FRBSL
Post author: Charles Couch