JOLTS Report: flows of openings and hires highlight labor market stresses

JOLTS Report: flows of openings and hires highlight labor market stresses

* The U.S. Job Openings and Labor Turnover Survey (JOLTS) is published with a one-month lag, but it complements the Bureau of Labor Statistics’ (BLS) Employment Report by providing detailed insights into labor market dynamics including job openings, hires, layoffs, and other separations. According to JOLTS job openings in September fell to 10.4 million from an upwardly revised 10.6 million in August, while the number of hires ticked down to 6.4 million (Chart 1). The gap between job openings and hires ticked down to 3.9 million (-150k) but remains near all-time highs, reflecting strong labor demand amid widespread labor supply shortages, contributing to upward pressure on nominal wages and constraining production.

* The quits rate edged up to a record 3.0%, while the private sector quits rate rose to an all-time high of 3.4%, reflecting the confidence workers have in securing new jobs. Scarce labor amid strong demand has contributed to increased wage growth for those switching jobs, which rose 5.4% yr/yr in September according to the FRB Atlanta wage growth tracker. The quits rate in manufacturing edged up to 2.7% (+0.2 pp), while the leisure and hospitality quits rate rose to 6.4% (+0.3 pp) (Chart 2); workers incentivized by wage gains associated with job switching and the increased prevalence of non-wage benefits businesses have begun to offer, are quitting in droves. Elevated quits, particularly in leisure and hospitality, also reflect workers’ concerns over the delta variant and its impact on employment conditions in high-contact in-person industries.

* The number of unemployed people per job opening has soared to a record 1.4, above its level in January 2020 at the end of the longest labor market expansion in history (Chart 3). Nominal wages will need to accelerate to ‘catch up’ to elevated inflation and to incentivize those on the sidelines to rejoin the labor force.

* Job openings fell in construction (-25k), professional and business services (-83k), and leisure & hospitality (-97k), but rose (+141k) in private health care and social assistance. The uptick in job openings in health care and social assistance was matched by a 110k increase in hires reflecting the declining public health burden of COVID-19 on healthcare systems and the ramping up of elective and other health care procedures that were postponed due to the pandemic (Chart 4). Despite the increase in hiring, employment in health care and social assistance remains 600k below its pre-pandemic level.

* Despite strong tax receipts associated with the economic recovery, state and local governments have been slow to rehire educators, while private sector education hiring has also lagged. Hires fell by a combined 180k across public and private sector education, partly reflecting seasonal adjustment factors. Similarly, job openings in private educational services and state & local education fell 45k, and 114k, respectively suggesting hiring likely won’t pick up in the short term.

Chart 1: Job Openings & Hires (millions)

Chart 2: Quits Rate: Total Private, Manufacturing, Leisure & Hospitality (%)

Chart 3: Job Openings per Unemployed Person

Chart 4: Job Openings – Health Care & Social Assistance, Leisure & Hospitality (thousands)

Mickey Levy, mickey.levy@berenberg-us.com

Mahmoud Abu Ghzalah, mahmoud.abughzalah@berenberg-us.com

© 2021 Berenberg Capital Markets, LLC, Member FINRA and SPIC

Remarks regarding foreign investors. The preparation of this document is subject to regulation by US law. The distribution of this document in other jurisdictions may be restricted by law, and persons, into whose possession this document comes, should inform themselves about, and observe, any such restrictions. United Kingdom This document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers. Copyright BCM is a wholly owned subsidiary of Joh. Berenberg, Gossler & Co. KG (“Berenberg Bank”). BCM reserves all the rights in this document. No part of the document or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without the BCM’s prior written consent. Berenberg Bank may distribute this commentary on a third party basis to its customers.

Member FINRA & SIPC
This email and any files or attachments transmitted with it may contain confidential or privileged information and are intended solely for the use of the intended recipient. If you are not the intended recipient, please do not copy, retain, disclose or use any part of the message or its attachments. Please notify the sender immediately by return email and destroy or delete any copies. Dissemination or use of this information by anyone other than the intended recipient is unauthorized and may be illegal. Communications by email cannot be guaranteed to be secure or error-free. Emails and their attachments are subject to being intercepted, becoming corrupted, getting lost or delayed, or may contain viruses. Therefore, neither the sender nor Berenberg Capital Markets LLC (BCM) accepts any liability for any errors or omissions in the content of this message or problems in its transmission, including those arising as a result of its transmission over the internet.
BCM does not assume liability for the correctness and completeness of all information given and/or attachments contained herein. The provided information has not been checked by a third party, especially an independent auditing firm. BCM explicitly points to the stated date of preparation. The information given can become incorrect due to passage of time and/or as a result of legal, political, economic or other changes. BCM does not assume responsibility to indicate such changes and/or to publish an updated document. Any document(s) or attachment(s) is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers.
In light of upcoming regulatory changes, please be informed that BCM will continue to share information with you until unsubscribe@berenberg-us.com receives your termination/deletion request. For more information about the General Data Protection Regulation (GDPR) and our privacy policies please refer to https://www.berenberg-us.com/legal-notice. BCM reserves all the rights in this communication. No part of this communication or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without BCM’s prior written consent.
The information contained herein and sourced may have been adopted from various news sources, for example, Bloomberg, Reuters, Street Account and various other sources. BCM does not claim accuracy, completeness, timeliness, suitability, or otherwise regarding all the information on the securities, stock markets, or developments referred to within. On no account should the Content be regarded as a substitute for the recipient procuring information for himself/herself or exercising his/her own judgments. BCM is not responsible for any recipient(s) use of this information. This Content is not a solicitation or an offer to buy or sell any of the securities contained herein. This information does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of clients. Clients should consider whether any advice or recommendation in this Content is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of securities which may be referred to in this Content and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain securities.