JOLTS Data Analysis: Understanding The Job Opening Data
U.S. Job Openings (JOLTS) data continue to decline, now nearing a longer-term trend for the U.S. economy. This shows a cooling labor market but not a recessionary labor market...yet.
Job Openings are now back to where they were in 2019 before they flattened out into the Covid collapse and epic surge. At 7.673 million openings, investors should be watching for the warning shot when the number drops below 7 million.
The one concerning aspect of the JOLTS data is how quickly it has declined. At the current rate, the economy could be below the 7 million openings threshold by year end.
When combining the un-inversion of the yield curve, which historically signals a coming recession with the sharp drop in job openings, it would not be a stretch to assume the probability of a recession is high.
JOLTS data will be reported on Tuesday at 10am ET. Expectations are for 7.64 million in openings, not much below last month. This could show stabilization of the labor market.
What is JOLTS?
JOLTS stands for the Job Openings and Labor Turnover Survey. It is a monthly survey conducted by the U.S. Bureau of Labor Statistics (BLS). The primary goal of JOLTS is to provide a comprehensive picture of the dynamics of the labor market in the United States. It does this by tracking key metrics such as:
Job openings: The number of unfilled positions employers are actively trying to fill at the end of the month.
Hires: The total number of new employees added to payrolls during the month.
Separations: The total number of workers who left their jobs during the month.
Separations can further be broken down into:
Quits: Voluntary separations initiated by the employee.
Layoffs and discharges: Involuntary separations initiated by the employer.
Key insights from the latest JOLTS data (July 2024):
Job openings: There were approximately 7.7 million job openings, showing little change from the previous month but a decrease of 1.1 million over the year.
Hires: Hires were also little changed at 5.5 million.
Total separations: Increased to 5.4 million.
JOLTS data is a crucial tool for:
Economists and policymakers: To gauge the health of the labor market, assess labor shortages, and make informed decisions about interest rates and other economic policies.
Businesses: To understand the availability of labor and make strategic decisions regarding hiring, wages, and benefits.
Job seekers: To identify industries with high demand and make informed career choices.
