Note from dshort: Yesterday I was asked an interesting question from Jill Mislinski, my colleague at Advisor Perspectives who is now collaborating with me on our economic analyses. "Why don't we track the Bureau of Labor Statistics' JOLTS report?" she asked. Good question! We're now adding it to theAdvisor Perspectives monthly updates.
The latest JOLTS report (Job Openings and Labor Turnover Summary), data through February, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The timeframe is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.
The chart below shows the monthly data points four of the JOLTS series, which are quite noisy, hence the inclusion a six-month moving averages to help identify the trends.
The most closely watched series is the one for Total Nonfarm Job Openings, the blue line in the chart above. The moving average peaked in mid-2007 and began rolling over to its trough a couple of months after Great Recession ended. The Hires series is roughly similar in its trend. Likewise Quits, which are generally thought to show an economy that supports the flexibility to leave or change jobs. In contrast, Layoffs and Discharges, the red line, were somewhat inversely correlated to the other three.
The chart above is based on the actual number in the JOLTS report. Another way to think about them is as a percent of Nonfarm Employment, which essentially gives us a population-adjusted version of the data. Here is that adjustment for three of the JOLTS series. Note that the vertical axis for each is optimized for the high-low range.
Where Are We Now in the Business Cycle?
It would, of course, be excellent if we had historical JOLTS data stretching back through several business cycles. But alas we do not.
At the point, we can see that the Openings percent has surpassed the peak during the previous expansion. Hires continue to trend higher but remain below the 2005 peak. The Layoffs and Discharges series is trending sideways near its historic low.
The JOLTS reports will be interesting to watch in the months ahead. But the volatility of the data, which is also subject to revisions, encourages caution in taking the data for any given month very seriously.
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