November Job Openings and Labor Turnover Survey: No Improvement

Dan Greenhaus, Chief Economic Strategist at Miller Tabak & Co. recently commented on the latest employment figures.  Whereas most observers focus on certain measures, Greenhaus looks a little deeper to get a better understanding of the employment landscape.  Below are his comments:

Each month, the government releases a wide variety of economic data points, some of which garner much attention, some of which do not.  One indicator that falls into the latter category is the governments Job Openings and Labor Turnover Survey (JOLTS).  During the month, the BLS surveys establishments in order to gain a more complete picture of the labor market, hoping to obtain additional information on job openings, hiring and firing as well as other separations.  While the unemployment rate is an important indicator of the supply of labor, the job opening data within the JOLTS report helps us gain insight into the demand for labor.  As such, viewing one without the other, while informative, doesn’t provide as comprehensive a picture as does viewing them together.

In the most recent report which covers November, the number of job openings in the country declined to 2.415 million, a 6% decline from the prior month and a level over 27% below one year prior.  By itself, the decline in job openings is worrisome enough, however, when one compares this data to the total number of unemployed persons in the country, worrisome may be too light a term.  As it stood at the end of November, there were 6.35 persons available to work for every open position, a new high ratio.

While many analysts and economists have touted the decline in initial jobless claims and monthly job losses as positives, we do not share their enthusiasm regarding the likely path of employment going forward.  Today’s JOLTS data reinforces our position.  While it is all but certain that firings are nearing or at an end, several indicators including today’s data suggest that the pace of hirings could be relatively benign.  This is not to say jobs will not be added and this is not to say the labor market is not improving.  Just that persons looking for employment still face, as the data stands today, considerable hurdles.

Steven Karsh