December JOLTS Report Shows Renewed Stalled Jobs Market Due To Out Of Control Pandemic

This morning’s JOLTS report for December confirmed a jobs market recovery that has paused due to the increasing effects of the out of control pandemic. Most importantly, hires declined sharply - down by over 5% in a single month!

While the JOLTS data is a deep dive into the dynamics of the labor market, since it only dates from 2001, there are only 2 previous recoveries with which to compare the present. Nevertheless, it is worthwhile to make the comparison

In the two past recoveries: 

  • first, layoffs declined
  • second, hiring rose
  • third, job openings rose and voluntary quits increased, close to simultaneously

Let’s examine each of those in turn. In each case.

What appears below is that, although there has been some variation, the year 2020 through December has recapitulated the pattern from the last two early recoveries: the first two data series to turn - layoffs and hires - have indeed turned, while the last two - job openings and voluntary quits - have appeared to bottom but have had a much less dramatic rise. With increased pandemic restrictions and consumer caution, several renewed negative readings in November, but not enough to significantly change the trend.

This first graph compares layoffs and discharges (blue) with the 4 week average of initial jobless claims (red) prior to this recession, for reasons of scale since March and April would be “off the charts”:

You can see that, by the end of the recessions, layoffs were already declining, and continued to decline steeply over the next 3-8 months before reaching a “normal” expansion level. The turning point coincides exactly with the much less volatile, but more slowly declining, level of initial jobless claims.

The same had been the case this year up through October. Layoffs and discharges already declined to their “normal” level in May, while initial jobless claims peaked one to two months later, and continued to decline (slowly) into autumn. Then, in November, layoffs and discharges increased and remained elevated in December. Initial claims followed suit with a one month delay: 

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Disclaimer: This blog contains opinions and observations. It is not professional advice in any way, shape or form and should not be construed that way. In other words, buyer beware.

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