U.S. JOLTS: U.S. Labor Market Activity Deteriorates Slightly

The total job openings rate of 3.6% during December was lower than 3.7% in November. Nevertheless, the rate for all of last year remained steady at 3.6%. These rates remained down from the record high of 3.9% in July. The private-sector job openings rate held at 3.9%, and remained steady with last year's average. In the government sector, the job openings rate declined to 2.1%, equal to last year's average. 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 December. The job openings rate in education & health services improved to 4.9% and was up y/y. In professional & business services, the openings rate slipped m/m to 4.3%, but down from 4.9% during both 2014 and 2015. The job openings rate in leisure & health services declined m/m to 4.3%, still lower than the May 2016 high of 4.9%. The rate in retail trade returned to the record 4.0%. The factory sector job openings rate of 2.6% equaled last year's average. In construction, the rate eased to 2.2%, the lowest level in a year. 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 eased 0.1% (+4.2% y/y) to 5.501 million, down from the April high of 5.845 million. Private-sector openings improved 1.4% (4.8% y/y) to 5.017 million, and increased 4.8% y/y. Construction job openings declined 14.9% m/m, but rose 19.4% y/y, while the number of openings in education & health services rebounded 3.9%. Factory sector job openings rose by 3.5% (2.5% y/y). Professional & business services openings declined 11.9% y/y, while leisure & hospitality openings eased 1.0% y/y. Government-sector job openings declined 2.4% y/y.

The total hires rate held m/m at 3.6%, but that remained down from February's high of 3.8%. The private-sector hiring rate improved m/m to 4.0%, but remained below the high of 4.2% reached in February. The hiring rate in leisure & hospitality eased to 6.6%, still near its February high. In professional & business services, the rate strengthened to 5.4%. In education and health services, the hires rate slipped to 2.8%, and has moved erratically sideways for two years. The hires rate in construction jumped to 5.8%, the highest level in two years. A 4.2% hires rate in retail trade was below the February high of 5.4%. The government-sector hiring rate declined to 1.4%, the lowest level in roughly two years. The hires rate is the number of hires during the month divided by employment.

The number of hires increased 0.8% (-2.8% y/y) to 5.252 million. Private-sector hiring improved 1.6% (-2.2% y/y), but jobs in leisure & hospitality declined 1.9% (+0.4% y/y). Construction employment surged 16.9% (20.5% y/y), but factory sector hiring remained unchanged (+3.3% y/y). The number of professional & business services jobs surged 7.5% (-5.4% y/y), but jobs in retail trade were little-changed (-11.4% y/y). Government- sector hiring declined 4.2% (-10.6% y/y).

The total job separations rate eased to 3.4%, down versus its cycle high of 3.6% in February. The actual number of separations fell 1.0% m/m (-3.1% y/y) to 4.968 million. Retail trade separations plunged 4.7% y/y to the lowest level since October 2013. Leisure & hospitality separations fell 4.9% y/y. Professional and business services declined 2.7y/y, but separations in the education and health services sector rose 1.9% y/y. Government separations fell 12.7% y/y to the lowest level in roughly two years. 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 1.3% in February. The private-sector rate picked up to 1.3% versus 1.1% three months earlier. The government sector rate eased to a two-year low of 0.4%. Total layoffs declined 2.2% y/y. Private-sector layoffs eased 0.6% y/y, while government layoffs dropped 22.0% 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.