The latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics showed that there were 6.423 million job openings in America in December (lagged release), the lowest reading in two years. Some of the headline weakness was likely related to this past December being a disappointing month for employment data in general as policy uncertainty at that time was still relatively high. The January JOLTS data out next month could therefore reflect a large rebound, just as we saw in last week’s release of the nonfarm payrolls report. However, looking past this near-term volatility a substantial pullback in job openings is actually something we have suggested would occur as the labor market continues to tighten.
Indeed, total job openings have exceeded hiring for 60 consecutive months, but the gap has been narrowing since late 2018 as a pickup in wage growth has made it possible for many firms to finally acquire the skilled workers they need. The recent gains in the labor force participation rate, particularly in the prime-age (25-54) arena, may also be a factor behind the decline in the number of vacancies. Going forward there could be some additional softening in hiring demand related to the upcoming elections and other looming macro risks, but by most measures labor conditions in this country continue to favor job seekers. For example, initial jobless claims remain historically low, and job switchers are experiencing much better wage growth than job stayers (see below). Similarly, this latest JOLTS report revealed that there are nearly 700,000 more job openings in this country than out of worker Americans, and the ratio of quits to layoffs and discharges, an indicator of U.S. workers’ willingness to give up their current job security for better employment opportunities, remains at the high-end of the historic range.
Sources: Econoday, U.S. DoL, FRBA, FRBSL