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Economy in Brief

U.S. JOLTS: U.S. Labor Market Activity Holds Steady
by Tom Moeller  December 7, 2016

The total job openings rate stood at 3.7% during October, unchanged from September. It remained down from the record high of 3.9% in July. The private-sector job openings rate fell, however, to 3.9% from 4.0%, but was up slightly from last year's 3.8% low. In the government sector, the job openings rate held at 2.3% for the third straight month. The Bureau of Labor Statistics reports these figures in its Job Openings & Labor Turnover Survey (JOLTS).

Movement in the job openings rate by sector was mixed in October. Moving higher was the rate in retail trade which nudged up m/m to a record 4.1%. The job openings rate in education & health services jumped to 5.0%, also near the record high, and double the 2010 low. The factory sector job openings rate held steady for the third month at 2.6%, down from 3.1% in April. In government, the rate held at 2.3%, though that was up from the 2009 low of 1.2%. To the downside, the professional & business services job openings rate fell sharply to 4.3%, the lowest level since September 2014. In construction, it eased m/m to 3.0%, but was up from 1.9% twelve months earlier. The leisure & hospitality rate declined to 4.3%, the lowest level since December 2014. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.

The actual number of job openings declined 1.7% (+2.1% y/y) to 5.534 million, and has moved erratically sideways for over a year. Private-sector openings declined 1.8% (+1.7% y/y) to 5.022 million to the lowest level this year. Construction job openings more than doubled y/y, while the number in education & health services rose 12.4% y/y. Factory sector openings gained 3.5% y/y. On the weak side, professional & business services openings declined 19.4% y/y, while leisure & hospitality openings fell 5.0% y/y. Education & health services openings were off 1.6% y/y. Government sector job openings declined 1.3% y/y.

The total hires rate held at 3.5%, down from February's high of 3.8%. The private-sector hiring rate was stable m/m at 3.9%, and remained below the high of 4.2% reached in February. The hiring rate in leisure & hospitality bounced back to 6.2% following sharp declines from the February high of 6.9%. In professional & business services, the rate declined to 5.0%, its lowest level since June. In education and health services, the hires rate improved to 2.8%, but has moved erratically sideways for two years. The hires rate in construction improved to 4.3%, down sharply from 6.2% in December 2014. A 4.6% hires rate in retail trade was below last year's high of 5.0%. The government sector hiring rate was stable at 1.6%, but was up from 1.0% early in 2011. The hires rate is the number of hires during the month divided by employment.

The number of hires eased 0.4% (-2.2% y/y) to 5.099 million in October. It was the lowest level since May. Private-sector hiring was little changed (-2.1% y/y) as jobs in leisure & hospitality increased 5.9% (-2.8% y/y). Construction employment rebounded 4.5% (4.5% y/y) following a sharp September decline, but factory sector hiring declined 2.9% (+2.7% y/y). The number of professional & business services jobs declined 5.6% (-3.6% y/y) and jobs in retail trade experienced a 3.5% decrease (-0.8% y/y). Government sector hiring declined 4.9% (-2.5% y/y).

The total job separations rate held steady at 3.4%, but was down from its cycle high of 3.6% in February. The actual number of separations fell  1.2% m/m (-0.8% y/y) to 4.875 million. Retail trade separations rebounded 3.7% y/y, but has moved sideways for two years. Leisure & hospitality separations increased 3.6% y/y. Professional and business services fell 3.0% y/y, but separations in the education and health services sector increased 2.9% y/y. Government separations declined 10.9% y/y. Separations include quits, layoffs, discharges, and other separations as well as retirements.

The layoff and discharge rate remained at the record low of 1.0% in October, down from 1.3% in February. The private-sector rate ticked up to 1.2% following its sharp decline to a record 1.1% low. The government sector rate held at 0.5%, about where it's been for two years. Total layoffs declined 11.8% y/y. Private-sector layoffs fell 11.1% y/y, while government layoffs were off 22.5% y/y.

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in July, hires totaled 62.5 million and separations totaled 60.0 million, yielding a net employment gain of 2.5 million. These totals include workers who may have been hired and separated more than once during the year.

The JOLTS survey dates to December 2000 and the figures are available in Haver's USECON database.

Why Are Long-Term Interest Rates So Low? from the Federal Reserve Bank of San Francisco is available here.

JOLTS (Job Openings & Labor Turnover Survey, SA) Oct Sep Aug Oct '15 2015 2014 2013
Job Openings, Total
 Rate (%) 3.7 3.7 3.6 3.7 3.6 3.3 2.7
 Total (000s) 5,534 5,631 5,453 2.1% 9.7% 28.7% 4.6%
Hires, Total
 Rate (%) 3.5 3.5 3.6 3.7 43.6 42.2 39.6
 Total (000s) 5,099 5,121 5,268 -2.2% 5.2% 8.2% 3.5%
Layoffs & Discharges, Total
 Rate (%) 1.0 1.0 1.2 1.2 14.9 14.7 14.7
 Total (000s) 1,518 1,513 1,692 -11.8 2.7% 2.4% -5.3%
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