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Economy in Brief

JOLTS Headlines Weaker Than Report Itself Seems…
by Robert Brusca June 12, 2007

The JOLTS report quit rate is the most important reading of this varied report that has regional and industry detail as well as national readings. When people are wiling to QUIT the jobs they have it is the best sign of strength in the underlying labor market. This month the private quit rate remained steady at 2.2% while the quit rate in services industries remained high (79.8 percentile of its range) and the MFG sector saw quits drop to 1.4% from 1.5% in what has been a sector with weakening labor demands. The quit rate rose – surprisingly in construction but the seasonal construction work is beginning to pick up at this time of year. And the government quit rate, while a scant 0.7%, is as high as it has ever been – government workers simply don’t quit; many have the job for its job security and pension.

Sector Detail – complied from report details (see table)-- Services and Government showed a high quit rate in April and, while the construction sector’s quit rate rose in the month, it was still in the bottom 20Th percentile of its range. Hires were very strong for government - at the top of its range. This reading squares with recent reports that tell us that many states have seen revenues rise above their expectations. Hires are also firm in services: approximately in the top third of its range. The job openings readings are strong in their respective ranges across industries, save construction, but that reading is not matched by strength in hires everywhere. Either this is an example of worker skill shortages or job openings statistics are vague and substantially meaningless. Separations are in the top two-thirds of their range for services and MFG and they are stronger still in Government. They remain low in construction. In MFG it is probably early retirements at work or negotiated attrition since layoffs per se were not up on the month.

On balance, the JOLTS report confirms the positive trends we have seen in MFG, Services and the weakness in construction. The Government sector appears to have become a stronger source of job creation and employee retention. The private quit rate is stable and strong and is well underpinned by the service sector. Weakness in MFG jobs does not seem a threat to overall labor market strength. On balance, the detail of this report is encouraging about the economy.

JOLTS Rankings by Main Sectors
As of…… Major Job Sectors
Apr-07 Services MFG Construction Gov't
Job Openings 76.2% 84.6% 57.1% 87.5%
Hires 65.1% 42.9% 13.3% 100.0%
Separations 62.9% 66.7% 29.2% 75.0%
Quits 79.8% 66.7% 16.7% 100.0%
Raw readings by Industry
OPENINGS Services MFG Construction Gov't
Apr-07 2.5 2.3 2.0 2.1
Mar-07 2.3 2.2 1.9 2.1
Feb-07 2.6 2.3 2.9 2.1
Jan-07 2.6 2.3 1.8 2.1
Hires Services MFG Construction Gov't
Apr-07 4.4 2.5 4.3 1.9
Mar-07 4.3 2.3 4.6 1.8
Feb-07 4.5 2.6 3.9 1.7
Jan-07 4.5 2.6 3.9 1.7
SEPARATIONS Services MFG Construction Gov't
Apr-07 4.0 2.8 4.9 1.4
Mar-07 4.1 2.8 4.5 1.4
Feb-07 4.0 3.0 4.2 1.3
Jan-07 4.0 2.8 5.2 1.4
QUITS Services MFG Construction Gov't
Apr-07 2.5 1.4 1.8 0.7
Mar-07 2.5 1.5 1.7 0.7
Feb-07 2.6 1.5 1.6 0.6
Since 2000
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