It was a solid report from the Job Openings and Labor Turnover Survey (JOLTS) this month as openings jumped to 5.757 million versus 5.400 million expected. That’s below the all-time high for gross job openings set last year but the trend higher in openings after some moderation in the second half of 2015 suggests labor demand continues to climb. This is consistent with anecdotal evidence in the Fed’s Beige Book, ISM surveys (especially non-manufacturing, where labor has been listed as both in short supply and up in price for the last 9 months), NFIB survey data out this morning, and the Employment Situation Report for April. The total Separations rate was down in March, not necessarily a good thing, but that was more about a decline in layoffs than a lower quit rate.
On a rounded rate basis, openings are back to all-time highs, though it’s worth noting that the private openings rate is somewhat weaker on a relative basis, though still right at the top of its range.
As mentioned above, the quits rate remained low with both total quits and private-only quits rates moving sideways in the month of March. Higher quit rates translate to higher labor bargaining power, increased confidence from workers, and increases the rate of pay increases.
Layoffs remain near the bottom of their historic range on both a total and private-only basis. There is no sign whatsoever here that the US labor market is weakening or that a recession may be imminent. This data is extremely lagging (it’s the second week of May and we are only now just got March stats), but this broadly confirms the extremely strong readings we’ve gotten from initial claims throughout this year; they remain near all-time lows relative to the size of the labor force and near the lowest levels in more than a generation on an absolute basis.
Finally, below we note quit rates in low pre-requisite labor market sectors that may be more susceptible to a secular tightening of labor markets. Notable is the spike in Construction quits to the highest rate of the current recovery while other quit rates basically continue to trend higher at the sector level. In terms of layoffs, in March the South saw an all-time low for firings relative to its labor force while Midwestern states saw a spike in firings; still, that regional rate remains well below recent highs let alone recessionary conditions.