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December 2011 JOLTS Predicts Employment Growth to Continue

Jobs openings in the BLS Job Openings and Labor Turnover Survey (JOLTS) serves as a predictor of future jobs growth. In December 2011, the JOLTS trends continued to show positive pressures on employment.

The relevance of JOLTS to future employment is obvious from the graphic below which clearly shows JOLTS Job Openings trends leading or coincident to private non-farm employment trends.

So, even though the JOLTS data is for December while the recent BLS jobs data is January, JOLTS job opening trends are a valid forward employment indicator.  JOLTS data is saying the current growth trend of private sector employment should continue in the coming months.  Note that Job Openings are now at post 2007 highs.

JOLTS Job Openings, after breaking through the bottom of the channel for rate of change in November, has now returned to the high side of the channel it maintained during 2011.  November appears to have been an anomaly.

The separations and hires rate remained unchanged in December. The separation rate is the percent of workforce which quit or was laid off. Likewise, the hire rate is the percent of the workforce hired. Remember these are seasonally adjusted numbers – and the slightly better hire rate number logically suggests there is a tailwind to jobs growth.

However, please note that Econintersect has not been able to correlate the hire rate or the separation rate to jobs growth.  Overall, the increasing JOLTS Job Openings data is telling us there is moderate upward pressure on the labor market – and the weakness seen in last month’s data was transitory.

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