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JOLTs: Sharp One-Off Decline, But Trend Lower For Openings

January 16, 2020

Bottom Line: The reported level of job openings fell sharply in November. One-off declines in openings are not unusual and this one appears due to both retail trade, where businesses likely filled seasonal openings in advance of November, and construction, often volatile due to weather. Looking through the volatility, though, the trend in openings is lower. The hires to job openings ratio bottomed in 2018 and is edging higher on a trend basis, something that often happens before recessions. Against that the quit rate was unchanged at 2.3%, and the layoff & discharge rate fell slightly to 1.1%. Overall, the report confirms a trend towards deceleration in the labor market from overall very strong levels -- and while this bears watching, lower job openings are not yet a major warning signal.

Job Openings FELL by 561k in November to 6.800 million, compared with market expectations for an increase to 7.250 million.

Government job openings FELL by 42k. Consequently, private sector job openings FELL by 520k. Over the past 12 months, there were 826k more job openings , 2,143k more than the March 2007 pre-recession peak level.

Job Hires ROSE by 39k in November to 5.821 million. Over the past 12 months, there were 00k more job hires, 352k above their November 2006 pre-recession peak level.

Job Separations FELL by 4k in November to 5.648 million. Over the past 12 months, there were 51k more job separations.

The Hires to Job openings ratio ROSE by 0.071 points from 0.785 to 0.856 and is modestly above its 12 month average of 0.799. The Number of Unemployed to Job openings ratio ROSE by 0.06 points from 0.80 to 0.85 and is modestly above its 12 month average of 0.83. This ratio has been declining since its July 2009 peak of 6.7 amid some volatility.

Article by Contingent Macro Advisors