Private Sector Job Openings Keep Declining From the 2018 Peak

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Each month, unemployment and payrolls data from the Bureau of Labor Statistics (BLS) Employment Situation report is followed up by the Job Openings and Labor Turnover Summary. This so-called JOLTS report comes with a one-month lag, but it targets the internal metrics inside of the employment market in a different manner than the payrolls reports. It measures hires into and separations from the workforce, but on a more detailed basis. It also measures the number of total job openings in the country, layoffs and firings, and the number of workers who have actually quit their jobs.

The BLS reported that the number of job openings fell by 277,000 to about 7.0 million as of the last day of September. The total number of hires and separations were 5.9 million and 5.8 million, respectively. Within the separations, the quits rate and the layoffs and discharges rate were little changed at 2.3% and 1.3%, respectively.

There are some basic rules for following the JOLTS report each month. Overall employment rises when the number of hires exceeds the number of separations, and overall employment declines when the number of hires is less than the number of separations.

September’s job openings rate was 4.4%, and of the decline of 277,000 in the month, 262,000 were tied to the private sector. Job openings were down by 124,000 in health care and social assistance, and the retail trade saw a drop of 102,000 job openings. Federal government job openings were down by 19,000 in September. Of the sectors with net new job openings, information led the pack with a gain of 25,000. The number of job openings decreased in the Northeast region. Without rounding, the 6.30 million private sector openings in September was down from 6.562 in August and was from 6.771 million in September of 2018.

The hires rate was little changed at 5.9 million in September and was unchanged at 3.9%. The hires level was down by 30,000 in federal government jobs, and the number of hires was little changed in all four U.S. regions.

One area of focus in the health of the economy is also seen in the total separations. This includes quits, layoffs and discharges, as well as other separations. The quits generally are considered voluntary separations by the worker, and it measures workers’ willingness or ability to leave a job. The number of total separations was little changed at 5.8 million, and the rate was unchanged at 3.8% in September.

The number of quits was little changed in September at 3.5 million, and the quits rate was 2.3%. The quits level was little changed for total private and for government, but the number of quits decreased in accommodation and food services by a drop of 74,000. The quits rate was down 19,000 in real estate and rental and leasing, and quits were lower in the Northeast and South regions. Without rounding, September’s 3.498 monthly quits was down from the recent peak of 3.668 million in July.

The number of layoffs and discharges rose by 152,000 in September to 2.0 million, and the layoffs and discharges rate was 1.3%. According to the BLS report, the total layoffs and discharges rose by 151,000 in the private sector, with a gain of 72,000 in accommodation and food services. Health care and social assistance saw the number of layoffs and discharges rise by 42,000 in September.

Over the trailing 12-month period ending in September, the total number of hires was 69.9 million and separations totaled 67.4 million. This is a net employment gain of 2.5 million, but these totals also include workers who may have been hired and separated more than once over the course of that time.

It would be easy to take a “glass half-empty” approach and only point out that the number of job openings is down substantially from the summer and from a year ago. That said, the number of openings is still statistically quite high from the over 5 million from the second quarter of 2015 through the fourth quarter of 2017.

ZipRecruiter sent us some data on the overall views of the report. Their view is that the 7.0 million job openings has now hit an 18-month low and that there are 5% fewer job openings than there were at the same time last year. ZipRecruiter noted that companies pulled back on hiring in September amid a global slowdown in economic growth, continued trade policy uncertainty and mounting fears of a possible recession, and the 8% rise in the number of layoffs and discharges versus a year ago is largely a result of “the retail apocalypse” and due to recent weakness in manufacturing. That said, ZipRecruiter’s view is that there are still 1.3 million more job openings than there are unemployed workers, and even as job openings have fallen 5% from a year ago, the number of monthly new hires has actually risen 5%.

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