the September 7th Job Openings and Labor Turnover Survey (JOLTS) report

The Bureau of Labor Statistics of the Labor Department released its latest JOLTS report on Wednesday.

The main results:

–nationwide job openings are now at 5.9 million, the highest figure in the 16 year history of the report.  This is substantially above the 4.5 million level of 2006-07.

–the rate of new hires has been flat for about two years at just over 5 million monthly.  While this is 5% – 10% below the rate of 2006-07, the very high number of job openings would have been consistent with an unemployment rate of 3% ten years ago.  This seems to me to be a point in favor of the idea that the main impediment to filling jobs is finding workers with needed skills.

–3 million workers are voluntarily leaving their jobs monthly.  This is a sign they’re confident of finding employment again without much difficulty.  That’s back to the pre-recession levels of 2006, and almost double the recession lows.

All of this argues that the US is at or near full employment.  On the other hand, however, there’s little sign of the upward pressure on wages that this situation would have produced in the past.


Whatever the reason for slow-rising wages, it seems to me there’s no reason in the employment figures for the Fed to maintain anything near the current emergency-room-low level of short-term interest rates.



the November 2014 Employment Situation

the Employment Situation

The Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation report at 8:30 this morning.  I had intended to igrnore the report and continue laying out my Strategy for stocks next year.  But the news is surprisingly good–despite the apparent indifference in futures markets as I’m writing this.

lots of new jobs

The economy added 321.000 new jobs in November, all but 7,000 of them in the private sector.  That’s way above the average jobs gain over the past year, as well as miles ahead of economists’ forecasts (which may say as much about the forecasts as about the economic reality).  In addition, revisions to the two prior months reported were also positive, totalling an extra 44,000 positions.  Final job gains for September stand at +271,000; the current October estimate is +243,000.

To put the figures in perspective, the economy needs to create 125,000 – 150,000 new jobs each month to absorb first-time job seekers leaving school.  Anything over that eats into long-term unemployment.  Over the past three months, then, close to half a million people have shifted from being unemployed to having work.


The unemployment rate remained at 5.8% despite the large job gains.  This is mostly, I think, because the workforce expanded by about a half million as better job prospects caused people who had given up the search for work starting to look again. That’s what usually happens.  At least some part, however, is due to the fact that job gains/losses and the unemployment rate are determined using two different surveys–and two different sets of data.


The latest JOLTS (Job Openings and Labor Turnover Survey) report, about a month ago, from the BLS offers similar encouragement.  There are now 4.7 million unfilled jobs in the economy.   More important, the quits rate–that is, the number of people voluntarily leaving their jobs, presumably for better employment elsewhere–is rising.  This is a sign that present jobholders have increasing confidence in their skills and employability.

economic ointment fly:  wage growth

The only fly in the employment ointment is that wages are still only rising at a 2% annual rate, or basically no growth in real (inflation-adjusted) terms.

From a stock market perspective, it’s hard to know if this is good or bad.  Higher wages would presumably mean more consumer spending and therefore accelerating earnings growth for publicly traded companies.  That’s a plus.  On the other hand, accelerating wage growth can be an early indicator of inflation to come–and might cause the Fed to speed up the pace at which it will be raising interest rates in 2015.  That would surely make the ride for stocks bumpier, and would most likely cause prices to decline.

My bottom line:  despite Wall Street’s current indifference, this report is surprisingly good news.

Back to strategy on Monday.

employment: the Employment Situation and JOLTS reports

Over the past few days, the Labor Department has released two periodic reports about employment in the US.  Both were favorable and suggest that the economy was stronger during the winter than the consensus has been theorizing.  Either the severe winter was less of an impediment than most thought and/or the underlying strength of the economy is greater.  The safest course is to assume that the reality is a little bit of both.  But if it’s mostly the latter, the groundwork is being set for s positive surprise about jobs as the weather improves.

the Employment Situation

Last Friday, the Bureau of Labor Statistics published its monthly Employment Situation report.  The Establishment Survey part of the ES showed that the country gained +192,000 new jobs during March, which was considerably better than the initial reports for the prior two months.  All the gains came from the private sector;  government neither added nor subtracted from the total.

Revisions to the prior two months’ data were also a positive.  The grim +113,000 figure reported for January, which was revised up to +129,000 positions last month, was upped again–this time to +144,000.  The February figures were also increased, from +175,000 to +197,000.

These figures describe an economy that’s absorbing all the new entrants to the workforce and chipping away at the long-tern unemployed at a rate of about 50,000 a month.  The latter rate would suggest that we won’t be back to full employment for lat least several more years.  Personally, I think the reality is a lot more complex.  Nevertheless, there appears to still be plenty of labor available for employers–enough that big wage gains, the earliest signs of incipient inflation, shouldn’t be a worry.

JOLTS (= Job Openings and Labor Turnover Survey)

The JOLTS report for February came out yesterday.  It’s the government’s compilation of the number of unfilled jobs available in the economy, as well as an analysis of the reasons why people leave the jobs they have.  Included in the report is an interesting  series of highlight graphs.

Overall, JOLTS portrays an economy that has steadily progressed back toward normal in job creation since mid-2009.  Although it may be difficult to say exactly what “normal” is in the early 21st century, most measures seem to be just about back to their levels in 2004.  Certainly, the job situation is nowhere near as buoyant as it was in early 2007–but that’s when the economy was overheating as a result of the banks’ home mortgage fraud.

At the end of February, there were 4.2 million unfilled jobs in the economy.  There were 2.5 unemployed people per job opening vs.  6.2 in the depths of the recession.   Of total job leavers, about 60% are quitting, meaning leaving voluntarily (and presumably for other jobs), and 40% being layoffs and discharges.  That’s about the same ratio as in 2004.  However, the absolute number of quits, 2.4 million in February, is still below the 2.5-2.6 million a month that occurred in 204.  It’s also way below the 2.8 million a month rate that prevailed in mid-2007.

The quits figure seems to suggest that there’s still considerable reluctance on the part of employees to take the risk of leaving secure jobs, even with the promise of higher wages and more fulfilling work.

investment significance

Whatever gyrations short-term traders may be putting the securities markets through, the overall economy in the US seems to be healthy, and achieving steady, if unspectacular growth.  There’s also some possibility that growth will accelerate a bit as the weather improves.



last week’s jobs numbers

There were actually two sets of figures published by the Bureau of Labor Statistics.  The Employment Situation report, which is normally released on the first Friday of the month but which was delayed by the government shutdown, and the JOLTS (Job Openings and Labor Turnover Summary) report for August.

The Employment Situation. released on October 22nd, showed the job market as essentially unchanged in September from prior months.  The initial estimate for September was a gain of 148,000 jobs, a bit less than the consensus forecast of domestic economists.  But the survey is accurate only to +/- 100,000.  And my impression is that economists’ estimates are just stabs in the dark, centered around the trend of recent months’ results.  So unchanged is the best characterization, in my view.

Revisions were benign, as well.  July was revised down by 15,000 to +89,000 positions;  August was revised up by 24,000 to 193,000.  The net change, +9,000 jobs, is statistically insignificant.

The JOLTS report for August, published on the 24th, and which I pay somewhat less attention to, wasn’t earthshaking, either.  The economy had 3.9 million unfilled jobs at the end of that month.  That’s about 100,000 more than in July and about a quarter million more than in August 2012.  The fact that more employers are looking to hire–all in the private sector, not government–is a good thing.

There is some controversy surrounding the JOLTS figures, however.  Why is the unemployment rate so high, at 7.2% of the workforce, when there are almost four million unfilled jobs?

One camp thinks factors like mismatches between, say, the location of the jobs and that of the unemployed is a big reason, but that four million is an ok number in a healing economy.  The other, which includes me, thinks that the JOLTS figures are evidence that a good chunk of current unemployment is structural rather than cyclical–caused by a fundamental mismatch between worker skills and job requirements.  If so, the only way the JOLTS number will come down is through retraining programs and changes in education policy from Washington.  Fat chance of either happening.  But if camp #2 is right, current indifference by government risks creating a permanent underclass of chronically unemployed that will be a big long-term problem.

The bottom line:  neither report has major short-term Wall Street implications.