May’s Job Opening and Labor Turnover (JOLTS) survey showed a new all time high for the total number of job openings. Separations crashed, driven lower by fewer layoffs in the month. Downward revisions kept the Openings Rate for both all workers and Private workers flat versus initially reported figures last month, but both remain within a few tenths of a percent of all time highs, continuing to illustrate strong labor demand.
Quits continued to move sideways, in keeping with their recent trend for both total and private quit rates. While the current level is showing no deterioration and is well above rates observed for most of the recovery, a lack of acceleration in quits remains a headwind for wages as workers are unable or unwilling to “trade up” to higher paying jobs. As long as the quit rate remains repressed, we think it’s unlikely there will be a rapid acceleration in average hourly earnings measured in the monthly Employment Situation Report along with Non Farm Payrolls.
As we expected last month, Layoffs & Discharges retreated back to the middle of their recent range, falling sharply month-over-month for both Total and Private measures of worker firings.
Our last chart shows quit rates by industry for a variety of low-skill or entry-level industries. As shown, labor demand at the industry level is still trending higher. There were several industry-specific revisions to higher quit rates versus April data. Overall JOLTS was positive but should have no significant effect on FOMC thinking on the labor markets, very marginally reducing the chance of a September rate hike.