November 2011 JOLTS Continues to Show Upward Pressure On Jobs

Jobs openings in the BLS Job Openings and Labor Turnover Survey (JOLTS) serves as a predictor of future jobs growth. In November 2011, the JOLTS trends continue to show upward pressures on employment.  However, if current trends continue, it could be argued that the upward pressure is running out of steam.

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 November while the recent BLS jobs data is December – 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.

Looking at rate of change – JOLTS Job Openings has now broken through the bottom of the channel – and is now appears to be trending down – this is indicative of a weakening jobs picture in the USA.

The separations rate remained unchanged and the hire rate improved in November. 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 both the separations rate and the hire rate ratios remained approximately unchanged (suggesting little overall effect from these declines).

Please note that Econintersect has not been able to correlate the hire rate or the separation rate to jobs growth. However, increasing JOLTS Job Openings data is telling us there is some upward pressure on the labor market – but this pressure appears to be diminishing.

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