U.S. JOLTS: Job Openings Weaken; Hires Improve

The Bureau of Labor Statistics reported that the total job openings rate declined to 3.7% during May from 3.9% in April, revised from a record high of 4.0%. Despite the decline, the hiring rate improved to 3.7%, its highest level in nine months. These figures are from the Job Openings & Labor Turnover Survey (JOLTS).

Declines in the job openings rate were broad-based. The private-sector job openings rate fell to 4.0%, the lowest level in three months and has moved sideways for two years. The job openings rate in professional & business services declined to 4.8% and remained below the March 2016 high of 6.1%. The construction sector job openings rate fell sharply to 2.2%, down from 3.4% in September. The leisure & hospitality openings rate eased to 4.9%, but remained near the record high. The education & health services rate slipped to 4.5%, and was below the near-record high of 5.1% in February. The trade, transportation & utilities rate held steady at 3.4%, but retail trade rose to 3.9%, a five-month high. The factory sector job openings rate declined to 2.7%, down from the record high of 3.2% in March. The government sector rate held at 2.4% where it's been for three months. That was up, however from 1.6% in 2011. 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 5.0% from April's record high to 5.666 million. Private-sector job openings fell 5.2% (+1.6% y/y) led by a 23.0% decline (-17.6% y/y) in the construction sector which reversed the April increase. Leisure & hospitality openings eased 1.2% (+9.5% y/y) and education & health services openings dropped 2.9% (+2.5% y/y). Factory sector openings were off 6.0% (-0.3% y/y) while professional & business services openings fell 5.2% (-13.9% y/y) for the second month. Retail trade openings improved 12.7% (7.4% y/y). Job openings in the public sector declined 3.2% and were little-changed y/y.

The rise in the overall hires rate to 3.7% reflected a jump in the private sector to 4.2%, the highest level since February of last year. The manufacturing hires rate surged to 2.7%, up from 2.2% nine months ago. The hiring rate in professional & business services rebounded to 5.5%, a four month high. The hiring rate in leisure & hospitality held steady at 6.0%, while the hires rate in the education & health services sector improved to 2.9%. The construction sector hiring rate held steady at 5.5%, and the trade, transportation & utilities rate rebounded to 3.8% from a four-year low. The government sector hiring rate held steady at 1.5%, down from 1.7% nine months earlier.

The number of private-sector hires recovered 9.0% (7.6% y/y) to 5.143 million after a sharp April decline. Professional & business service sector hiring jumped 12.0% (2.0% y/y). Hiring in education & health services rebounded 9.9% (3.1% y/y) and reversed the prior month's decline. Hiring in trade, transportation & utilities rose 7.9% (2.8% y/y) and also reversed April's drop. Factory sector hiring rose 5.7% (24.3% y/y), while the number of leisure & hospitality jobs improved 0.7% (-1.5% y/y). Construction sector hiring improved 1.6% (21.3% y/y) and government sector employment rose 1.5% (-21.8% y/y).

The total job separations rate increased to 3.6% and reversed the prior month's decline. The leisure & hospitality separations rate rose to 6.0% but remained well below the 2016 peak of 6.4%. The construction sector's separations rate slipped to 5.2%, but the professional and business services rate rose to 5.3%. In trade, transportation & utilities the separations rate rose to 3.8% from the four-year low of 3.5%. The information sector's rate rose slightly to 2.9%. The factory sector separations rate held steady at 2.6% and the separations rate jumped to 2.6% in the financial sector, the highest level since February of last year. The separations rate in the government sector was unchanged at 1.5%. Separations include quits, layoffs, discharges, and other separations as well as retirements.

The layoff and discharge rate held steady near the record low at 1.1%, down from 1.2% two years ago. The private-sector rate ticked up to 1.3% but remained below the 2015 high of 1.5%. The government sector rate eased to 0.4%. Total layoffs declined 4.6% y/y. Private-sector layoffs were off 3.7% y/y, while government layoffs fell 16.7% 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. 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.