February 2012 JOLTS Continues to Predict Moderate Jobs Growth

Written by Steven Hansen

JOLTS trends continued to predict moderate jobs growth that have been seen to date in the coming months.

Although there was no growth in jobs openings in February 2012, 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 shows JOLTS Job Openings trends leading or coincident to private non-farm employment trends.

So, even though the JOLTS data is for February while the recent BLS jobs data is March, 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 is a noisy index (especially comparing year-over-year growth) – as seen on the graph below.  But the monthly changes are remaining in a channel showing the rate of growth of jobs openings are flat – in other words predicting the past rate of employment growth should continue going forward

Both the separations and hires rate changed – but maintained the same relationship to each other. 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 jobs gains resulting from more hires than separations.

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 loosely correlates against one month old data.

We do see the long-term leading relationship discussed earlier with job openings correlating to private non-farms payrolls.  Overall, improving JOLTS Job Openings counts are forecasting the same moderate jobs growth seen to date.

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