Each monthly Employment Situation report from the U.S. Department of Labor shows a broad measure of the jobs market. With unemployment previously reported at a multi-decade low of 3.5%, the December nonfarm payrolls released a week earlier showed that nonfarm payrolls rose by only 145,000 in December. Some economists have been pointing to cracks in the overall forecast for the jobs market in 2020. One factor that will support at least some of the concerns is the Labor Department’s Job Openings and Labor Turnover Summary for November.
While the so-called JOLTS report always comes with a one-month lag compared with the unemployment report, November did come with a sharp drop in total job openings in the United States. The JOLTS report also will give at least some stronger support for those who are calling the jobs market as peaked after nine years of robust growth.
After peaking at 7.6 million job openings in March of 2019, the trend of openings has continued to fall despite a brief recovery seen in October. November’s total number of job openings fell to about 6.8 million and was down by 561,000 from October of 2019 and by 826,000 from November of 2018.
The quits rate was unchanged at 2.3%, and the layoffs and discharges rate was 1.1%, counted as 5.8 million hires and 5.6 million separations. One thing contributing to the decline in the number of jobs is that the retail trade industry has seen continued pressure (separations rose by 103,000) from bankruptcies and store closures. While manufacturing job openings kept rising through last summer, that sector has seen its job openings drop by more than 30% since its peak in July.
The drop in job openings may still not be a universal issue that the jobs market is weak. Total separations decreased in the so-called other services by 53,000, and by 13,000 in federal government jobs. Overall, service sector job trends have continued to signal that conditions were improving and that there was continued expansion. There were also notable drops in job openings in construction, wholesale trade, and the sub-category of finance and insurance within financial activities.
With a decline in job openings as a concern, the number of hires has remained more consistent. The Bureau of Labor Statistics data showed that the number and rate of November’s total nonfarm layoffs and discharges were little changed at 1.7 million and 1.1%, respectively.
Also worth noting is that the annual changes do include workers hired or separated more than once during the year. Still, the 12-month period ending in November showed that total hires had been 69.8 million, compared with a total of 67.5 million separations, a net employment gain of 2.3 million jobs.
Despite a serious contraction in the job openings, the prior week’s report for December showed that the number of people employed part time for economic reasons was 4.1 million, down by 507,000 from December of 2018. Those are the individuals who would have preferred full-time employment but worked part time because their hours had been reduced or they were unable to find full-time jobs. Multiple prior reports also cited that the top complaint by employers is that they cannot find a candidate who is qualified to fill the positions they have open.
Some economists have been quick to draw conclusions and have called the peak in the job market too soon. This November JOLTS report would give them some fuel to put on that fire. That said, payrolls and wages are still rising, and a 3.5% unemployment reading would have to get a lot worse for anyone to consider these slower numbers as a bad job market.
Job openings had not consistently remained above 6 million until later in 2016, and they spent most of the time from 2010 through 2013 between 3 million and 4 million. The media reports were far too quick to call an imminent recession last summer, and even if these job openings do not recover, the economy remains far away from recession at this time.
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