Rates Aren’t Too Low

The JOLTS report continued the recent uptrend in job openings. They spiked to a record high of 9.286 million from 8.288 million which destroyed estimates for 8.045 million and the highest estimate which was 8.2 million. The April jobs report was disappointing, but it’s still surprising economists expected a decline in openings. Many industries are having a really tough time filling skilled openings. There are now 1.1 unemployed persons per job opening. Employers are also spamming openings with no serious intent to fill them. Openings have a signaling effect to competitors and investors.

This report was okay because hires also increased, albeit not by nearly as much. Hires rose from 6.006 million to 6.075 million which was the best reading since last August. This small increase isn’t a surprise because job creation was disappointing in April. Hires should increase by more in May. This small increase means the difference between openings and hires rose again to a new record high. The ratio of hires to openings varies across industries.

As you can see from the chart below, manufacturing hires are about 30% of openings which is very low.

Companies either can’t find talent because they aren’t willing to do the work/pay enough to get new workers. Maybe margins are too slim to afford paying workers well. On the other hand, hires in the accommodation & food services industry are 93% of job openings. That’s also near a record low, but it signals employers in this industry are more serious about finding help. This industry is much more labor-intensive than manufacturing.

The best part of this report was the spike in the quits rate because it means workers feel comfortable that the labor market will provide them with a new job. Specifically, the quits rate rose from 2.5% to 2.7% which is a record high going back to late 2000. The prior record high was last month’s reading.

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