The latest job openings and labor turnover summary (JOLTS) report showed that job openings unexpectedly rose in November, while hiring and quits slowed. Vacancies increased to 8.098 million in November from October's upwardly revised level of 7.839 million. The latest reading was more than the expected 7.730 million vacancies and is the highest level of job openings since May.
From the press release:
The number of job openings was little changed at 8.1 million on the last business day of November, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and total separations were little changed at 5.3 million and 5.1 million, respectively. Within separations, quits (3.1 million) decreased, but layoffs and discharges (1.8 million) changed little. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class.
Background on JOLTS (Job Openings and Labor Turnover)
The JOLTS report is a monthly survey of job openings, hiring, and job separations (quits, layoffs, discharges) released by the BLS. Unlike the unemployment rate that measures the supply side of the labor market, JOLTS data helps gauge labor demand. An increase in job openings can generally be seen as a positive sign for the economy since there are plenty of job opportunities for workers.
The chart below shows the monthly data points of the four components of the JOLTS series. They are quite volatile, hence the inclusion of six-month moving averages to help identify the trends. The moving average for openings was above the hires levels for over five years starting in 2015, as seen in the chart below. The openings MA briefly dipped below the hires for two months (May and June 2020), only to climb above once more in July 2020. Over the past two years, job openings, hires, and quits have all been trending down with job openings falling the fastest. During that same time, layoffs and discharges have been slowly trending up.
For comparison, here is the monthly BLS Employment Situation Summary charted with JOLTS data:
In November, there were 7.145million unemployed workers and 8.098 million job openings. This equates to 1.13 jobs available per unemployed worker in November, up slightly from October.
A Population-Adjusted Perspective on JOLTS
The chart above is based on the actual numbers in the JOLTS report. A better way to view the numbers is as a percent of non-farm employment, which essentially gives us a population-adjusted version of the data. Here is that adjustment for four of the JOLTS series. The vertical axis for each is optimized for the high-low range to facilitate an understanding of the individual trends.
JOLTS: Job Openings
Job openings as a percent of nonfarm employment was at 5.1% in November, up from 4.9% in October.
The number of job openings was little changed at 8.1 million on the last business day of November but was down by 833,000 over the year. The job openings rate, at 4.8 percent, changed little over the month. The number of job openings increased in professional and business services (+273,000), finance and insurance (+105,000), and private educational services (+38,000) but decreased in information (-89,000).
JOLTS: Hires
Hires as a percent of nonfarm employment was at 3.3% in November, down from 3.5% in October.
In November, the number of hires changed little at 5.3 million but was down by 300,000 over the year. The hires rate was little changed at 3.3 percent.
JOLTS: Quits
Quits as a percent of nonfarm employment was at 1.9% in November, down from 2.1% in October.
In November, the number of quits decreased to 3.1 million (-218,000) and declined by 451,000 over the year. Over the month, the quits rate decreased to 1.9 percent. Quits decreased in accommodation and food services (-85,000) and in arts, entertainment, and recreation (-22,000).
JOLTS: Layoffs
Quits as a percent of nonfarm employment was at 1.1% in November, unchanged from October.
In November, the number of layoffs and discharges changed little at 1.8 million but was up by 219,000 over the year. The rate remained unchanged at 1.1 percent. Layoffs and discharges increased in accommodation and food services (+102,000).
The Business Cycle and JOLTS
Based on the six-month moving averages, we can see that:
- The job openings moving average is above the hires levels.
- Job openings are below their all-time high, trending down, and nearing their pre-pandemic levels.
- Hires are below their all-time high, trending down, and are now below pre-pandemic levels.
- Quits are below their all-time high, trending down, and are now below pre-pandemic levels.
- Layoffs and discharges continue to slowly rise but remain below pre-pandemic levels.
The relationship between quits and layoffs
To reiterate a previous point: Increases in quits suggest employment flexibility and confidence among workers. Quits tend to be inversely correlated with layoffs/discharges, which are associated with business cycle weakness. Between the Great Recession and the COVID pandemic, quits rates increased at a steady pace. Meanwhile, layoffs/discharges fell following the Great Recession and leveled off for many years. During the COVID pandemic, layoffs and discharges saw all-time highs while quits moved in the opposite direction. As the economy rebounded from the COVID downturn, quits reached an all-time high in March 2022 in what has been called "The Great Resignation" while layoffs/discharges reached all-time lows. Currently, quits are back below pre-pandemic levels and layoffs/discharges are slowly making inching their way back up.
It would, of course, be excellent if we had historical JOLTS data stretching back through several business cycles. However, the BLS only began tracking this data in December 2000. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular non-farm employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.
The JOLTS reports is interesting to watch, but the volatility of the data, which is also subject to revisions, encourages caution in taking the data for any given month very seriously.
Here's our list of monthly employment updates:
Employment Situation Summary
ADP Employment Report
Unemployment Claims
Civilian Labor Force, Unemployment Claims, and the Business Cycle
Long-Term Trends by Age Group
Aging Work Force
Ratio of Part Time and Full-Time Employment
Multiple Jobholders
Workforce Recovery Since Recession
Read more updates by Jen Nash
