There was a surprising development back in June, when that month’s JOLTS report revealed a curious, if welcome for the US economy, inflection point: for the first time in reported BLS data, the number of US job openings surpassed the number of unemployed workers.
Fast forward two months, when as the BLS reported last Friday, the number of unemployed workers increased from 6.0 million to 6.3 million (after hitting 6.6 million in July). The question was whether this increase would also reverse this Opening-Unemployed trend. However, as the just released June JOLTS report revealed, for the third month in a row the number of job openings stayed above the total number of unemployed workers, as May’s 6.638MM job openings number was revised higher to 6.659MM, yet which rose modestly again to 6.662MM in June which was once again comfortably above the 6.280MM unemployed workers. This means that June was the third consecutive month in which the number of job openings was higher than the number of unemployed Americans.
In other words, in an economy in which there was a perfect match between worker skills and employer needs, there would be zero unemployed people at this moment (which of course is not the case.)
According to the BLS, the number of job openings increased in educational services (+20,000) but decreased in transportation, warehousing, and utilities (-84,000). The number of job openings was little changed in all four regions.
Adding to the exuberant labor picture, while job openings remained above total unemployment, the number of total hires also remained just shy of a new record, at 5.561 million in June, down slightly from 5.747 million in May, and on the verge of an all time high. The number of hires s increased in finance and insurance (+31,000).
According to the historical correlation between the number of hires and the 12 month cumulative job change (per the Establishment Survey), either the pace of hiring needs to drop, or else the number of new jobs will rise significantly in the coming months.
Meanwhile, last month’s biggest surprise, the record number of Americans quitting the job – the so-called “take this jobs and shove it” indicator which shows worker confidence that they can leave their current job and find a better paying job elsewhere – dipped modestly in June, from a record 3.480MM to 3.402MM, but still just shy of a record print, with the BLS reporting that biggest number of quits in educational services (-14,000).
Putting all this in in context
- Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.7 million open jobs on the last business day of June 2018.
- Hires have increased since a low in June 2009 and have surpassed prerecession levels. In June 2018, there were 5.7 million hires.
- Quits have increased since a low in September 2009 and have surpassed prerecession levels. In June 2018, there were 3.4 million quits.
- For most of the JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.
- At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In June 2018, there were 1.0 million fewer hires than job openings.
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