June 07, 2017
By Steven Vannelli, CFA in Economy

Today’s release of the Job Openings & Labor Turnover (JOLTs) revealed a few interesting observations about the US labor market. First, the pace of hires is fading. Keep in mind JOLTs data is released a month after employment data, so we are looking at April stats in the following charts. This fading in new hires fits with the deceleration in payroll employment growth we saw last Friday.

Second, the quantity of new job openings hit a new high. This would seem to signal that there are some sort of skills mismatch where employers are having trouble filling available positions.

Third, the rate of job separations (whether voluntary or involuntary) appears to have peaked and may be rolling over. This would suggest there are many opportunities for employees to upgrade to a better job. Again, we wonder if a skills mismatch is to blame here. There are clearly jobs open, but the pool of candidates just may not be qualified for the open positions.

Fourth, if we compare the number of hires and separations to the total labor force, we can see that dynamism in the US job market has flat-lined over the last year. Here we measure the total amount of hires and separations over the last 12 months and compare to the total current labor force. This is a blunt measure of gross job creations and destruction, rather than the net number of new jobs that is reported by the Labor Department. It appears the gross level of hiring never reached the peaks of 2006 before rolling over.

All of this may help put in context the weak wage readings we’ve been seeing recently. While average hourly earnings for the private sector peaked at 2.85% at the end of the year, annual income gains have slowed to 2.46% as of last week’s employment report.

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