After several months of relatively boring JOLTS prints, this morning Janet Yellen’s favorite labor market indicator once again got exciting, and not in a good way.
Starting at the top, according to the March JOLTS reported, job openings unexpectedly tumbled by 325K – the biggest drop since October 2023 – from an upward revised 8.813 million in February to just 8.488 million, far below the 8.690 million expected – and the lowest number since February 2021 when it last printed below 8 million.
The 192K miss to estimates of 8.690 million, was the biggest since last October.
According to the DOL, in March job openings decreased in construction (-182,000) and in finance and insurance (-158,000), but increased in state and local government education (+68,000) because when all else fails, just “hire” more government zombies, ideally in the form of unionized illegal aliens to boost wages and inflation.
The kicker: construction jobs openings plunged from 456K to 274K, a 182K one-month drop and the biggest on record!
In the context of the broader jobs report, in March the number of job openings was 2.059 million more than the number of unemployed workers (which the BLS reported was 6.429 million), down significantly from last month’s 2.355 million and the lowest since June 2021.
Said otherwise, in March the number of job openings to unemployed dropped to 1.32, a sharp slide from the February print of 1.36, matching the lowest level since August 2021 and almost back to pre-covid levels of 1.3.
But even more interesting than the drop in job openings was the number of quits: here we find that the number of people quitting their jobs, an indicator closely associated with labor market strength as it shows workers are confident they can find a better wage elsewhere – unexpectedly plunged by 198K, the biggest montyly drop since last June, to just 3.329 million the lowest number since January 2021!
But perhaps the most notable twist, is that amid the stagnant level of job openings, not only did the number of quits plunge – as workers no longer expect to find better paying jobs elsewhere – but so did the number of hires, which cratered by 281K to just 5.500 million – the lowest since Jan 2018 (excluding the record one-month plunge due to covid), and is now well below pre-covid levels.
Needless to say, a freeze in hiring is always the precursor to a wholesale collapse in the labor market, which we expect will materialize in 2-3 months, but since the election will determine what econ data is published, expect the US economy to be in freefall the moment Trump wins the election.
It’s not just us warning on this metric: the chief economist as Glassdoor, Daniel Zhao, echoes our warning that “employers are hesitant to hire & workers are hesitant to switch to a new job”
Softness in the hires & quits rates are a concern: The hires rate fell to 3.5%, matching the lowest post-pandemic level. The quits rate fell to 2.1% is at its lowest since Aug 2020.
A sign that employers are hesitant to hire & workers are hesitant to switch to a new job
— Daniel Zhao (@DanielBZhao) May 1, 2024
His conclusion: “low hires, quits and layoffs are an unusual combination that points to a certain “lock-in” in the job market. For the Fed, that is likely to tamp down wage growth driven by job switchers even if it doesn’t slow net jobs growth.”
Low hires, quits and layoffs are an unusual combination that points to a certain “lock-in” in the job market. For the Fed, that is likely to tamp down wage growth driven by job switchers even if it doesn’t slow net jobs growth.
6/6
— Daniel Zhao (@DanielBZhao) May 1, 2024
Finally, no matter what the “data” shows, let’s not forget that it is all just estimated, and it is safe to say that the real number of job openings remains still far lower since half of it – or some 70% to be specific – is guesswork. As the BLS itself admits, while the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate remains near a record low 33%
In other words, more than two thirds, or 70% of the final number of job openings, is estimated!
And at a time when it is critical for Biden to still maintain the illusion that at least the labor market remains strong when everything else in Biden’s economy is crashing and burning, we’ll let readers decide if the admin’s Labor Department is plugging the estimate gap with numbers that are stronger or weaker (we already know that they always get revised lower next month).
Tyler Durden
Wed, 05/01/2024 – 10:39
