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posted on 12 October 2016

August 2016 JOLTS Job Openings Rate Shows No Year-over-Year Growth

Written by Steven Hansen

The BLS Job Openings and Labor Turnover Survey (JOLTS) can be used as a predictor of future jobs growth, and the predictive elements show that the year-over-year growth rate of unadjusted private non-farm job openings were insignificantly changed from last month. In addition, the growth rate trends declined using the 3 month averages.

Analyst Opinion of JOLTS Data

It comes as no surprise that JOLTS is now showing little year-over-year job openings growth. Historically, this indicates significant slowing of employment growth. Both employment and JOLTS job openings year-over-year growth have been slowing for the past year. This aligns with Econintersect's Employment Index and the Conference Boards Employment Index - but both indices are forecasting moderate employment gains similar to August's and September's employment growth.

There was no market expectations from Bloomberg this month.

  • the number of unadjusted PRIVATE jobs openings - which is the most predictive of future employment growth of the JOLTS elements - shows the year-over-year growth is near the lowest level since the Great Recession. The year-over-year growth of the unadjusted non-farm private jobs opening rate (percent of job openings compared to size of workforce) shows no growth.
  • The graphs below looks at the year-over-year rate of growth for job opening levels and rate.

this month's graph

The relevance of JOLTS to future employment is obvious from the graphic below which shows JOLTS Job Openings leading or coincident to private non-farm employment. JOLTS job openings are a good predictor of jobs growth turning points - and have similar trend lines..

The graph below uses year-over year growth comparisons of non-seasonally adjusted non-farm private BLS data versus JOLTS Job Openings - and then compare trend lines.

Year-over-Year Change - Unadjusted Non-Farm Private Jobs Openings from JOLTS (blue line, left axis) compared to Unadjusted BLS Non-farm Private (red line, right axis)

  • The JOLTS Unadjusted Private hires rate (percent of hires compared to size of workforce) and the separations rate (percent of separations compared to size of workforce - separations are the workforce which quit or was laid off).

Unadjusted Hires (blue line) and Unadjusted Separation Levels (red line) - Non-Farm Private

Please note that Econintersect has not been able use the hire rate or the separation rate (or a combination thereof) to help in understanding future jobs growth. A Philly Fed study agrees with Econintersect's assessment. JOLTS is issued a month later than the jobs data - and correlates against one month old data.

For information, the Econintersect Employment Index and the Conference Board's Employment Index:

Comparing BLS Non-Farm Employment YoY Improvement (blue line, left axis) with Econintersect Employment Index YoY Improvement (red line, left axis) and The Conference Board ETI YoY Improvement (yellow line, right axis)


Caveats on the Use of JOLTS

This data series historically is very noisy which likely is a result of data gathering issues and/or seasonal adjustments. Therefore this series must be trended to provide any understanding of the dynamics. One of two months of good or bad data are not predictive.

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