Wherever one looks, the data point to ongoing strength in the US labour market, albeit with some signs that the situation is moderating. Weekly initial jobless claims are close to all time lows, the unemployment rate has now been less than 4% for over 18 months and labour demand is robust, as indicated by the most recent JOLTS job openings data (Chart 1).
Investment Insights • MFN
3 min read
JOLTS: one data point does not a trend make
The release of yesterday’s Job Openings and Labor Turnover Survey (JOLTS) data provided further evidence that US labour market conditions remain tight. This precipitated another sell off in bonds, driving yields to multi-year highs. Daniel Murray puts the data in context in this Macro Flash Note.
Chart 1. US Labour Market Indicators - Job Openings and the Unemployment Rate
Source: Bureau of Labor Statistics, EFG calculations. Data as of 03 October 2023.
The headline number of 9.6 million job openings was 700k above the previous month’s (upwardly revised) number and around 800k greater than expected. A solid number indeed. However, when viewed in the context of the longer-term evolution of the data, the release was consistent with prior month-to-month variations in the series. This is well illustrated with reference to the orange line in the chart, which shows the trend in the time series since January 2022 to the most recent release for August 2023.
As well as highlighting the downtrend that has been in place for most of the past two years, the chart also illustrates how there was a surge in job openings following the enormous stimulus put in place during the Covid crisis. The increase in job openings that followed that stimulus was far in excess of what would have been predicted by extending the prior trend. The decrease in job openings over the past couple of years can therefore be viewed as a return to normality following the fading influence of Covid-related stimulus.
In summary, while the data release was strong in absolute terms and also robust relative to expectations, it does nothing to alter the view that job openings remain in a down trend. If, over the next few months, we were to see several sequentially higher data points for job openings then that would call into question this hypothesis. However, until then yesterday’s release should be viewed simply as another data point in a volatile down-trending series.