Labor Market Rolling Over: Hiring Below 2014 Levels, Despite Rising Job Openings
Posted by Tyler Durden on November 8, 2016 2:42 pm
Tags: Beveridge curve, BLS, Business, Causes of unemployment in the United States, Economy, HIGHER UNEMPLOYMENT, Labor, Labour law, Layoff, Recession, Recessions, Social justice, unemployment, Unemployment in the United States
Categories: Beveridge curve BLS Business Causes of unemployment in the United States Economy HIGHER UNEMPLOYMENT Labor Labour law Layoff Recession Recessions Social justice unemployment Unemployment in the United States
Moments ago the BLS reported Janet Yellen’s favorite labor market indicator, the JOLTS survey, which as expected (since it tracked the modestly weaker September payrolls) showed that in September, the number of job opening rebounded from the August 378,000 plunge to 5.453 million, rising by a modest 33,000 to 5.486 million. The number of job openings declined to a series low in July 2009, one month after the official end of the most recent recession. Employment continued to decline after the end of the recession, reaching a low point in February 2010.
The September job opening rate rose fractionally to 3.7% from 3.6% prior month, with the greatest number of job openings in the construction, financial, education & health services, and professional and business services industries. Job openings in trade & transportation, leisure and hospitality and government all fell.
The ratio of unemployed persons per job opening was 1.4 in September 2016; when the most recent recession began (December 2007), the number of unemployed persons per job opening was 1.9. The ratio peaked at 6.6 unemployed persons per job opening in July 2009 and trended downward until the end of 2015. Since January 2016 the ratio has leveled off and has remained between 1.3 and 1.4.
However confrming that the US labor market is indeed rolling over, despite the near record (if modestly declining) number of job openings, the pace of hiring has failed to keep up, and slid once again in September, declining by 187,000 to 5.081 million. It was also lower than the September 2014 number of hires which was 5,092 million.
As shown, in the chart below, job hires were 1% lower compared to the 5.131 million a year ago.
Another way of visualizing the rollover in hiring: when superimposed over cumulative payrolls added over the past 12 months, it appears that the US job market is rolling ober.
The number of hires has exceeded the number of job openings for most of the JOLTS history. Since February 2015, this relationship has changed as job openings have outnumbered hires in most months, also suggesting that the pace of hiring has slowed down disproportionately.
Quits, which are generally voluntary separations initiated by employees, continue to rise. The quits rate can serve as a measure of workers’ willingness or ability to leave jobs. The number of quits has exceeded the number of layoffs and discharges for most of the JOLTS history. During the latest recession, this relationship changed as layoffs and discharges outnumbered quits from November 2008 through March 2010. In September 2016, there were 3.1 million quits and 1.5 million layoffs and discharges.
Putting all the key numbers in context, hires in the private sector have increased since their low in June 2009 and are near their prerecession levels. In September 2016, there were 4.7 million hires. Quits in the private sector have increased since their low in September 2009 and are near their prerecession levels. In September 2016, there were 2.9 million quits.
Finally, taking a look at the distroted Beveridge Curve, which plots the job openings rate against the unemployment rate, shows that from the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From 2010 to the present, the series has been trending up and to the left as the job openings rate increased and the unemployment rate decreased. In September 2016, the unemployment rate was 5.0 percent and the job openings rate was 3.7 percent. This job openings rate corresponds to a higher unemployment rate than it did before the most recent recession.