Strong Economy Conundrum: 1 Million More Job Openings Than Available Workers

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It turns out that the jobs market can keep improving. In the Job Openings and Labor Turnover Survey (JOLTS), the Bureau of Labor Statistics (BLS) indicated that the number of job openings reached a new record high of 7.3 million in the month of December.

While this has a one-month lag, the BLS showed a much larger than expected gain in the payrolls for January just a week earlier. What stands out about the number of job openings in this JOLTS report is that it exceeds the number of the total unemployed job seekers by more than a million.

This JOLTS report also suggests that fears of a slowdown in the jobs market have been premature, erasing some concerns that the trends had contracted marginally in November. Another milestone for the jobs market is that there have now been more job openings than unemployed Americans for the past 10 consecutive months.

The private sector led the charge with an additional 198,000 openings in December. This was broken down as 88,000 construction job openings, followed by 84,000 in accommodation and food services. The number in health care and social assistance was 79,000 in December.

Where things look even stronger is in the year-over-year comparisons. Job openings were up by 29%, and the number of hires was up 7%. The highly important quits rate was up 4%. The BLS indicated that the layoffs and discharges rate rose 3%, but the number of unemployed Americans was down by 4% in December.

The quits rate is now at the highest level in 18 years. As far as why the quits rate is so important: when more and more workers are quitting their existing jobs it is a sign that nation’s workforce is willing to pursue new opportunities for higher pay or for other issues, such as proximity to home and lifestyle preferences. If everyone is too scared to quit their current jobs, it means they might be worried about job security elsewhere.

At least some pockets were signaling some contraction as the number of job openings decreased in a number of industries. The largest decrease was seen in the nondurable goods manufacturing, with a drop of 37,000 openings. The federal government saw a drop of 32,000 openings, and real estate and rental and leasing saw a drop of 31,000 openings.

December’s JOLTS report also shows a total picture for all of 2018. The number of hires for the year totaled 68.5 million, and total separations totaled 65.9 million. While these figures include the workers who may have been hired and separated more than once during the year, this brought a net employment gain of 2.6 million jobs in 2018.