The Fed gets more rate-hike material. Only retail trade is back to normal.
By Wolf Richter for WOLF STREET.
These are data points about the labor market that Fed Chair Powell cites every time during the post-rate-hike press conferences in support of the rate hikes. The data points are based on what 21,000 businesses said about their hiring plans, actual hires, actual layoffs, voluntary quits, etc., as the labor market spiraled into contortions, starting in early 2021. There was suddenly an explosion of job openings, record low layoffs, and a huge number of people who quit jobs to get better jobs, while companies hired aggressively to poach workers from other companies, leading to massive churn and job hopping, and the largest wage increases in decades, which are now supplying additional fuel for the already raging inflation – hence Powell’s focus on these data points.
Job openings fell, but remained in the astronomical range.
Job openings fell by 1.1 million in August to 10.0 million, seasonally adjusted (and to 10.2 million not seasonally adjusted), the biggest decline since the lockdowns. But the level of 10 million job openings is still way up there in the astronomical zone, up by 41% from August 2019, according to the data released today as part of the Job Openings and Labor Turnover Survey (JOLTS) by the Bureau of Labor Statistics, based on surveys of 21,000 businesses.
So a slight softening in the labor market that still remains contorted, with labor shortages still hampering some sectors. Job openings didn’t fall equally across the board – they fell hard in some sectors, but rose in others, including construction. The only large sector where job openings are back to normal is “retail trade.” In all other categories, job openings were still way above their normal range. We’ll get to those in a moment.
Layoffs & discharges ticked up, but remained near record lows.
The number of layoffs and discharges ticked up a tad after two months of declines and remained in the record-low range in the data going back to the year 2000. The 1.46 million layoffs and discharges in August were down by 20% from the already very low level in August 2019:
And most people that are getting laid off are finding new jobs quickly, with many of them already having a new job lined up before they walk out of their old job.
This is confirmed by a different data set, based on people filing for unemployment insurance with their state unemployment offices, and reported weekly by the US Department of Labor. Last Thursday, it reported that the initial claims for unemployment insurance fell by 16,000 from the prior week to 193,000 – near historic lows, further documenting that most of the people who were laid off either already had a new job lined up or quickly found a new job, before even filing for unemployment insurance: another sign from a different point of view of how tight the labor market still is:
“Quits” rise again: still massive churn and job hopping.
The number of workers who voluntarily quit jobs rose to 4.16 million, after four months of small declines, and was up by 16% from the then record levels in July and August 2019.
“Quits” – combined with a large number of hires – are a sign of churn and job-hopping, a sign that workers either already have a better job waiting for them, or that they’re confident that they can get a better job quickly. These workers thereby effectively arbitrage the tight labor market to get a job that pays more, provides better benefits, better hours, is closer to home, etc. And it remains far above the Good Times before the pandemic:
Hiring ticked up a tad.
Employers hired 6.28 million workers in August, seasonally adjusted, up a tad from July, and up by 6.3% from August 2019. Hiring is a function of job openings and being able to fill them, constrained by the tight labor market, with most of the hires being workers who already had jobs and were hired away from other companies.
This shows that most of the 4.16 million people who voluntarily “quit” jobs and most of the 1.46 million people who were laid off became part of the 6.28 million people who were hired by other employers.
Job openings in major industry categories.
Professional and business services: This large industry category (22.4 million employees) also has the most job openings. The category includes the subcategories of Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services.
The number of job openings fell by 119,000 in August, to 1.87 million, the second month in a row of declines, but were still up by 47% from August 2019, and remain in the astronomical zone, with labor shortages abating slightly:
Information: This is a tiny category with only about 3 million employees, and it doesn’t really fit into the list of major categories and doesn’t impact the overall numbers much. But some of the small-scale layoffs that have percolated through the news media are in this category: Web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.
Job openings – they’re always small and volatile – dropped by 40,000, or by 17%, in August from July, to 197,000 (not seasonally adjusted), but remain above all pre-pandemic records:
Healthcare and social assistance: Job openings fell by 236,000, the largest drop on record. But at 1.72 million, they remain in the astronomical zone, and were up by 43% from August 2019, as reports of staffing shortages in the healthcare system persist.
Leisure and hospitality: Job openings fell by 111,000, continuing a trend, to 1.40 million, but still up by 25% from August 2019, indicating that restaurants and hotels continue to make progress in staffing up, but still have ways to go.
Retail trade: Job openings were already back in the normal-ish range in July. In August, they fell by 143,000 to 803,000 openings, roughly the same as in August 2019, as retailers got their staffing largely back where they need it, after the huge spike last year when whole categories of brick-and-mortar retailers re-opened:
Education – as depicted by state & local government job openings, which are mostly in education: Job openings fell by 58,000 from the all-time record in the prior month, to 888,000. This was up by 42% from August 2019, amid continued reports of teacher shortages.
Manufacturing: Job openings fell by 115,000 to 795,000, but remain in the astronomical range, up by 85% from August 2019:
Construction: Job openings jumped by 54,000 to 407,000, up 26% from August 2019. We saw yesterday that construction of single-family houses is backing off a little, but multifamily and non-residential construction continues to grow:
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