Despite Weak Payrolls, Job Openings Reached New Cycle High

The U.S. Labor Department has some data which may be a bit difficult to understand when you see unemployment is staying above 9% and when no new net non-farm payrolls were added for the most recent month.   The Labor Department said today that there were 3.2 million job openings at the end of July.  The report also showed that the hires rate and separations rate offset each other at 3.0% each.

While the number of job openings remained under the 4.4 million openings before the end of 2007, this 3.2 million figure is 1.1 million higher than the trough in July 2009.

What sectors with openings increased may be surprising: manufacturing (257,000); Construction (70,000); Trade, transport, and utilities (551,000); Professional and business services (616,000); Retail trade (310,000); Education and healthcare (591,000); Leisure and hospitality (339,000); Arts, entertainment, and recreation (113,000); Accommodation and food services (517,000).

The government job openings, including federal, was 328,000 for job openings.

The report further noted, “The number of hires in July was 4.0 million, up from 3.6 million in October 2009 (the most recent trough) but below the 5.0 million hires recorded when the recession began in December 2007.  Over the past 12 months, the hires rate (not seasonally adjusted) fell for federal government. The hires rate was essentially unchanged for all other industries and regions. The number of job openings in July (not seasonally adjusted) increased over the year for total nonfarm and total private. Eight industries experienced an increase over the year in the number of job openings; the number of job openings decreased for federal government. The number of job openings rose in the Midwest, South, and West.”

Admittedly, this “new data” is actually a final round-up of July rather than August.  The current picture may look different after the turmoil of August and even in early September.  There are about 4.3 people now competing for each job opening on average, but that means that some of the fields are exponentially higher as far as applicants versus openings.  It generally takes 30 to 90 days for an opening to be filled.

With August having had so much turmoil, the real tell will be in another month after we have non-farm payrolls and after we get to revisit this same data for the months after.

The bad news is that the most recent data and trends could have put June and July as the cycle peak in openings.  That would be very unwelcoming in the months ahead.

JON C. OGG