Joltin’ JOLTS!

You can talk all the shit you want to about the stock market being manipulated by central bankers or buybacks or whatever. That’s fine.

But the job market is on fire. Don’t even front. Here’s what Peter Boockvar had to say about it yesterday.

The last BLS release doesn’t accurately capture what’s really going on in the way that the JOLTS report does. And the new JOLTS data, which covers through July, tells you that employers are struggling to find skilled people for their openings and that quit rates are at a new cycle / all-time high.

Quits are important because they are indicative of workers’ confidence that they’ll be able to find another gig without a problem. People don’t usually quit a job in the absence of other offers / options.

Here’s some more on the topic via Nick Colas and Jessica Rabe at Convergex, a global brokerage company based in New York:

#1 – The number of job openings jumped by 228,000 to 5.87 million in July. That’s up 1.4% y/y and marks a new record high dating back to when the data was first tracked in December 2000. As a result, those searching for jobs continued to face less competition. There were just 1.32 unemployed individuals for every available position in July compared to 1.38 in the previous month when using the headline unemployment figure, which does not include discouraged workers (those who gave up hopes of finding a job and stopped looking). That’s the lowest this figure has reached since early 2001.

#2 – Our ‘Take this job and shove it indicator’ – or ratio of quits to total separations – rose to a recovery high of 60.4%. This resulted from a gain in quits as 2.98 million people voluntarily left their jobs in July, up 9.4% y/y. By contrast, 1.58 million individuals were laid off or discharged, down 5.1% y/y. The Fed Chair looks to the quits number as a measure of worker confidence: voluntarily leaving one’s position requires conviction in the economy and in his or her financial situation and ability to find a new position. Workers’ eagerness to switch jobs can also help put upward pressure on wages.

#3 – The number of hires increased 2.8% y/y to 5.23 million in July, marking two consecutive months of gains after three straight months of declines. This month’s print still missed the recovery high of 5.51 million in February. Additionally, total hires came in below the number of job openings like every other month this year even with a record level of available positions. This discrepancy likely highlights employers’ difficulty finding skilled workers, as noted in anecdotal reports like the Fed’s Beige Book.

Josh here – one more thing regarding BLS non-farm payrolls for August. It makes sense to see the pace of new hiring begin to decelerate or flatline as we get closer to “full” employment. College-educated workers are nearly fully employed. Hopefully, this tautness extends further into other segments of the labor force.

And yes I am familiar with the fact manufacturing jobs are not being added at the same pace as service sector jobs and that not everyone can be a bartender. Save your emails, I got it.


Takin’ Care of Business (Or Not)
Convergex – September 8th 2016


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