January 2012 JOLTS: Down a Little but Still Good

Written by Steven Hansen

JOLTS trends continued to show positive pressures on employment in January 2012.

Although there was a slight degradation in the data this month, JOLTS remains in its improvement channel established since the beginning of 2011.  This data series historically is very noisy which likely is a result of data gathering issues or seasonal adjustments.

Jobs openings in the BLS Job Openings and Labor Turnover Survey (JOLTS) serves as a predictor of future jobs growth.  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 January while the recent BLS jobs data is February, 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.

JOLTS Job Openings, after breaking through the bottom of the channel for rate of change in November 2011,remains on the high side of the channel – as seen on the graph below.

Both the separations and hires rate remained declined in January. 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.  We do see the long-term relationship discussed earlier (job openings correlating to private non-farms payrolls).  Overall, improving JOLTS Job Openings data is telling us there is moderate upward pressure on the labor market.

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