Written by Steven Hansen
The BLS Job Openings and Labor Turnover Survey (JOLTS) has been a good predictor of future jobs growth:
- this July 2012 report is mixed, and could be considered a month of bad data;
- the number of PRIVATE jobs openings – which is the most predictive of the JOLTS elements – declined this month, but remains well up from a year ago.;
- the growth trend line Econintersect sees in this index remains – however it is now near the lower end of the growth channel.
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)
Jobs Openings (blue line in the above graph) remains in a long term upward channel that began coincident with the end of the recession – even though the jobs openings this month is unchanged.
Although 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)
The JOLTS hires rate was unchanged and the separations rate declined 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 there were jobs gains resulting from separations being lower than 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 slowing or 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.