More Evidence of Weaker Labor Market in JOLTS Report

Jobs

Published: May 9, 2014 10:55 am

The U.S. Labor Department reading on the Job Openings and Labor Turnover Survey (the JOLTS report) showed that some 4.014 million job openings were available in the United States on the last business day of March. Unfortunately, this is down handily from the 4.125 million openings in February. Hopefully the strength in the latest payrolls report from the Labor Department is the reason for the drop — maybe the jobs are finally being filled, but the data signals that the outcome is a less optimistic scenario.

Friday’s JOLTS report indicates that the labor market simply remains a weak one. Now we have at least some additional knowledge about why Fed Chair Janet Yellen is keeping up the so-called Bernanke Put with the promise of keeping interest rates incredibly low for a considerable period. This weak JOLTS reading shows something different than the recent unemployment rate may have masked.

The JOLTS report showed that the hires rate was 3.4%, while the separations rate was 3.2%. These were unchanged in March, which might lead some argument over whether these job openings were simply cancelled or filled.

Another issue closing the debate over jobs strength was that there were 4.625 million hires in March, down from February’s reading of 4.699 million.

And the separations were listed as 4.431 million total in March. This is down marginally from the 4.459 million in February. The quits rate of 1.8% was unchanged and the layoffs and discharges rate of 1.1% was little changed.

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In an explanation that may seem counterintuitive, the separations (and particularly the quits rate) has to generally be rising for there to be a good jobs market. The reason is that you have to be willing to leave one job for another one. Again, it seems counterintuitive on the surface. The other benefit to a higher separations rate (and higher hires rate) means that employees generally feel more comfortable looking for new opportunities if they are unhappy in their current job.

Anyhow, this argument is a very small component of the overall economy. It also looks back to March, so it likely will not have a major impact on anything.

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