Employment: JOLT Stats Offer a Yawn
The most recent JOLTS number still show very high job openings and little weakness to make the Fed happy.
The JOLTS report failed to change the backdrop with the Job Openings line barely down at 10.46M in Nov 2022 from the revised 10.51M in Oct; Separations ticking up slightly to 5.87M from 5.76M; and Layoffs/Discharges lower to 1.35M in Nov from 1.45M.
Job openings increased in professional and business services and nondurable goods, while finance/insurance and Federal government move lower.
Hires exceeded Separations again in Nov as the needle is very slow to move.
The Quits rate in Separations serves as a worker confidence psych test, and the Quits rate rose in number and in % terms vs. employment (2.6% to 2.7%) with Quits over triple the total of layoffs.
If anyone was looking for reassurance on easing of the tight labor market and thus more confidence in friendlier wage inflation, the JOLTS report today does not offer it. Perhaps the Friday employment report will offer fresh clues – whether to worry more or just be patient. The YoY comps in inflation get easier as the year goes on, but that YoY measurement benefit quirk will not change the fact that labor cost pressures will remain a risk variable that needs to be recovered in goods/services pricing or come out of the bottom line of companies.
Whether it is the one-month lag in the JOLTS data or the simple fact that employers are waiting for the demand to actually be destroyed before they rationalize headcount, the JOLTS data released this morning tells a story very much like last month’s data (see Jobs and the Fed: JOLTS Gets Heavy Powell Focus 11-30-22). As we framed in yesterday’s note that covered “Initial Claims” across the cycles (see Employment Fixation: The Needle Will Move Very Slowly 1-3-23), the process of Fed policy flowing into jobs is going to be very slow and gradual absent some new major shock.
The JOLTS data is reported at a lag (today’s release was for November data), so the headlines and data will keep rolling out on where the cycle and the Fed are headed. On Friday, the jobs report will shed some light on labor that is timelier, as well as more granular, across industries and wages. The JOLTS data and the rate of weekly claims are not going to be reassuring to those worried about wage inflation and the flashbacks to the deadly “wage-price spiral” term of long ago. We refer you to the detailed JOLTS commentary we published last month for histories across Separations, Quits, Layoffs and where 2022 frames up in historical context.
The minimal changes in the JOLTs data overall are not helping the rhetorical case for wages getting checked by labor demand when Hires exceed Separations and a significant majority of the Separations are “Quits” – not Layoffs.
We will see what Friday holds since last month’s employment report did not reduce the inflation anxiety much (see Jobs Conundrum: Good is Bad, Bad is Good 12-2-22). So far, the markets have been steady with solid labor demand profiles even after the 2022 pain of inflation and the worst capital markets turmoil since the credit crisis.
To update:
