Written by Steven Hansen
The BLS Job Openings and Labor Turnover Survey (JOLTS) has been a good predictor of future jobs growth:
- cutting through the bells and whistles, nothing in this May 2012 report is suggesting deterioration of the labor market;
- using the non-adjusted data continues to give a clearer look at the trends.
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.
Jobs Openings from JOLTS (blue line, left axis) compared to BLS Non-farm Private (red line, right axis)
Note the big drop last month (April 2012) in JOLTS job openings – the largest drop since January 2009 (note – we were in a recession then) – and this month (may 2012) a partial recovery.
So, even though the JOLTS data is one month older than the current jobs data, JOLTS job opening trends are a valid forward employment indicator. The short term trend is arguable from this graph.
However, the trend is much clearer using non-seasonally adjusted non-farm private BLS data to look at the trend lines – and this means JOLTS is continuing to predict jobs growth in the 2% year-over-year range.
Year-over-Year Change – Jobs Openings from JOLTS (blue line, left axis) compared to Unadjusted BLS Non-farm Private (red line, right axis)
Both the JOLTS hires rate and the separations rate grew in this report. 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 this chart below would logically suggest no jobs gains resulting from separations offsetting hires.
Hires (blue line) and Separation Rates (red line) – Non-Farm Private
However, 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. JOLTS is issued a month later than the jobs data – and correlates against one month old data.
Hires less Separation Rate (blue line, left axis) compared to Non-Farm Private BLS Non-farm Private (red line, right axis)
In conclusion, there is nothing in this data which is suggesting a contraction of employment.
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.