Snapshot – JOLTS, Vacancies, and Hires

Are all jobless recoveries alike?

On Tuesday, the BLS released information on job openings, hires, and separations in April as reported in the Job Openings and Labor Turnover Survey. The job openings rate (the number of aggregate vacancies divided by total employment plus vacancies) decreased to 2.5% from 2.7% and the rate of hires (total hires divided by total employment) also decreased to 3.1% from 3.3%; two signs that the labor market is still having a difficult time recovering.

The JOLTS survey provides a more complete view of what comprises changes in total employment reported in the Employment Situation. The relationship between job openings and vacancies tells us to what extent employment growth is being affected by labor demand. If job openings and hires are growing at the same rate, then the counter-factual would be that hires could grow even faster if only there were more demand (job openings).  Payroll employment increased by 77,000 in April (revised down from 115,000), a number that was seen to be far away from what is needed to bring the unemployment rate back down to pre-recession levels, and the numbers today highlight a little what is behind the constantly weak employment reports.

As we do elsewhere in the blog, the graphs below compare the path of both job openings and hires in the 2001 cycle versus the current one from the peak. Data only permits looking at the last two cycles, both of which have been characterized as having a particularly slow recovery in employment (popularly coined ‘Jobless Recoveries’). Looking at JOLTS openings and hires, both of these series seem to track each other fairly closely, at least from the peak. In this regard, one would be led to believe that whatever mechanism is causing the slow response of employment must have been present in both cycles, or that all jobless recoveries are made alike.

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Warning Signs! First Quarter GDP Revisions and Disastrous May Jobs Report Show a Weakening Economy

The second estimate of GDP for the first quarter of 2012 and its components shows a much weaker economy than previously thought. After robust growth in real GDP at an annual rate of 3% in the fourth quarter of 2011 the economy slowed markedly to a 1.9% rate in the first quarter. Most of the change was due to downward revisions to state and local government spending and to personal consumption, particularly durables. These were somewhat offset by upward revisions to non-residential fixed investment and exports.

The somewhat negative report from the BEA was reinforced by the Institute for Supply Management’s release of the Purchasing Managers Index, a closely watched barometer of manufacturing activity. It showed a sharp decline to its lowest level since 2009.

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