By Paul Gomme and Peter Rupert
The BLS released the Job Openings and Labor Turnover Survey (JOLTS) for May on July 6. The data reveal a pretty mixed view. Job openings fell 496,000 and now stands at 9.8 million vacancies. The number of unemployed workers in May was 6.1 million so that there were 1.6 jobs available for each unemployed worker.
The JOLTS data also contains information on the rate at which workers are hired, laid off, quit and job openings. The rates are determined by dividing by the level of employment. The JOLTS covers about 95% of all nonfarm payroll jobs in the US. While the openings rate declined the hiring rate and the quit rate rose. The layoff rate remains at one of its lowest rates since the inception of the JOLTS in December of 2000. Note that all of the other rates are well above their historic average.
The JOLTS data provides some evidence for those looking for nascent signs of a recession. Quit and hiring rates fell through the March-November 2001 and December 2007-June 2009 recessions, and both series started falling prior to the latter recession. The declining quit and hiring rates since early 2022 fit this pattern. Unfortunately, JOLTS only covers three recessions, so it’s tough to make much of the historic precedents, particularly since the February-April 2020 recession was due to COVID-19. Another potentially confounding factor is that both quits and hires are at historically high rates, and the recent declines may be due to reversion to the mean.
The data on initial and continued claims for unemployment insurance also came out on July 6. Initial claims rose slightly but remain relatively subdued. Continued claims have been trending down over the past few months.
On July 7, the employment situation report for June was released by the BLS and showed a payroll employment increase of 209,000 but downward revisions for April and May totaling 110,000 for the two months. One way to think about these changes is that roughly half of the employment gains reported for June were offset by the downward revisions in the previous two months. The employment change in the private sector was the smallest increase over the past couple of years.
The phrase “little changed” was peppered throughout the press release for the Employment Situation Report. The report highlighted gains in employment in government (60,000), health care (41,000), social assistance (24,000) and construction (23,000). Yet the gains in professional and business services, and leisure and hospitality (both 21,000) were described as “little changed”. It would seem that the difference between a gain warranting notice, and “little changed” is 22,000.
Average hours worked in the non-farm sector inched up 0.1 hours to 34.4. That increase, combined with the increase in private employment led to about a 5% in total hours of work in the private sector. There was little change in average hourly earnings.
One way to combine data from JOLTS and the employment report is through the Beveridge curve which plots the vacancy rate (from JOLTS) against the unemployment rate (the household survey). As seen in the chart below, the data up to and including the Great Recession (2007-09) appears to lie on a stable Beveridge curve. After the Great Recession, the Beveridge curve shifted out. And after the pandemic, the Beveridge curve shifted out yet again, with the most recent data in the north west quadrant. One interpretation of an outward shift in the Beveridge curve is that it reflects lower efficiency in the matching process between jobs and workers. Under this interpretation, at a given level of unemployment, firms need to post more vacancies in order to fill jobs. An alternative interpretation is that the outward shifts in the Beveridge curve are due to lower costs of recruiting workers: firms post more vacancies because doing so is simply much cheaper that in the past. One way to distinguish between these two alternative interpretations is to look at how quickly vacancies are filled: less efficient matching says it should take longer while lower job posting costs implies a shorter period of time. Unfortunately, the speed at which vacancies are filled is no longer available.
According to the BLS household survey, employment increased 273,000, the number of people unemployed fell by 140,000 and the labor force increased by 133,000. The participation rate and employment to population ratio were unchanged. The unemployment rate fell from 3.65% to 3.57%.
