Job openings in construction near record; job market retightens in manufacturing and in business & professional services where many tech companies are.
By Wolf Richter for WOLF STREET.
We’re looking at this because the Fed is looking at it. Powell mentions it in the FOMC press conferences, because the Fed is looking for signs the labor market is getting less tight, and it got less tight overall – but remains tight. In some industries, it loosened. But in others, it re-tightened, such as in Professional and Business Services, where many tech companies are. In construction, it reached near record-tight. In manufacturing, it started to re-tighten again. That’s what the data shows that the Bureau of Labor Statistics released today as part of its Job Openings and Labor Turnover Survey (JOLTS), which is based on a large survey of employers (and not on internet job postings!!).
Job openings fell in October after the surge in August, but remain very high; the three-month average has been roughly flat for four months in a row and was higher in October than it had been during the summer.
Layoffs and discharges, despite breathless headlines about tech layoffs, are below their pre-pandemic lows. The rate of hiring has normalized, as the number of people who quit jobs has normalized because people have gotten scared after all these breathless layoff announcements, and so fewer people quit, and there were fewer newly vacated jobs that needed to be filled, and churn in the labor market backed off.
Layoffs and discharges remained in the historically low range. In October, 1.64 million workers were let go for whatever reason, up a tad from September, but down from 1.68 million in July and August, and down from the 1.7-1.8 million range in early 2023.
Businesses across the US fire workers for a variety of reasons, and this goes on all the time. When discharges are done for economic reasons, they’re layoffs. During the Good Times in 2014-2019, layoffs and discharges averaged 1.8 million per month. During the Great Recession, layoffs and discharges exceeded 2.5 million at the peak months. In March 2020, they hit 13 million.
We use the three-month moving average to iron out the month-to-month ups and downs and show the trends:
The rate of layoffs as a percent of nonfarm employment in October remained at 1.0%. During the Good Times before the pandemic, it ranged between 1.1% and 1.4%. In other words, the rate of layoffs and discharges in proportion of employment remains well below the lows of the good times:
The number of people who were hired in October dipped to 5.89 million, but was still higher than in July and August. We can now see that the number of hires has normalized, after the hiring boom in 2021 and 2022: In October, it was up by 1.4% from October 2019.
The number of hires is a function of two factors: expanding employment and the number of people who quit or get fired or retire or vanish in some other way, whose newly vacant jobs have to be filled with new hires; more on those voluntary quits in a moment:
Voluntary quits edged down to 3.63 million but was still higher than in July. Over the past four months, quits essentially remained flat, which is a big change from the big ups and even bigger downs since early 2022.
This chart shows the month-to-month changes, not the three-month moving average, which makes the sudden flat spot more visible. Clearly, quits have stabilized – after employers, during the era of the labor shortages, gave the biggest pay raises in 40 years on top of improved benefits and working conditions, in order to hire and retain workers.
Fewer quits means employers have to hire fewer people to fill the newly vacant spots, so that’s good for employers.
But fewer quits also means that natural attrition has slowed, and employers wishing to shed employees through attrition are seeing slower progress than anticipated, and we’ve already heard a few complaints about that suddenly.
Job openings – as reported by companies, not online job postings – fell in October, more than undoing the big surge in August, but were still 19% higher than in October 2019.
The three-month moving average (3MMA), after the high readings in August and September was flat for the fourth month in a row, and was up by 27% from the three-month average over the same period in 2019.
So that’s the trend: job openings, like quits, stabilized at these lower, but still very high levels:
Job openings in major sectors.
Professional and business services is a big category with 22 million employees that can move the needle. It includes some of the tech and social media companies. Others are in the “information” sector or in other categories. The category includes Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services.
The job market in this sector has re-tightened. Job openings rose for the third month in a row and were up by 46% from the same period in 2019:
- Up by 93,000 in October,
- To 1.75 million openings
- From 4 years ago: +46%
- 3MMA: +106,000 to 1.72 million openings
“Information,” a small sector with only 3 million employees, includes companies engaged in 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 jumped in October after having plunged in September, after having spiked in July to on of the highest levels in this cycle… (green line in the chart below). Which is why we don’t get too excited about the monthly spikes and plunges, but look at the three-month moving average (red line):
- Green: Up by 41,000 in October, after the plunge in September
- To 172,000 openings
- From 4 years ago: +15%
- Red: 3MMA: -30,000 to 166,000 openings.
In Manufacturing, with about 13 million employees, the job market is re-tightening again, with job openings now up by 46% from four years ago.
We just talked about the new and unfilled orders in manufacturing, which had surged in 2021 and 2022 and have since than traced along a high plateau, with some industries seeing continued growth in orders, and other seeing declining orders.
- Down by 14,000 in October, after jumps in August and September.
- To 587,000 openings
- From 4 years ago: +46%
- 3MMA: +14,000 to 597,000 openings, highest since June.
Construction, with about 8 million employees in all types of construction, has substantially retightened, with job openings up by 32% from four years ago. We discussed the eyepopping boom in factory construction, some of which is slowed by the tight market for construction workers.
- Down by a hair in October, after jumps in August and September.
- To 423,000 openings
- From 4 years ago: +32%
- 3MMA: +23,000 to 408,000 openings, highest since December 2022, and among the highest in the data:
Healthcare and social assistance, one of the largest sectors with 21 million employees:
- Down by 236,000 in October
- To 1.49 million openings
- From 4 years ago: +27%
- 3MMA: -74,000 to 1.68 million.
Leisure and hospitality, a big sector with 16 million employees:
- Down by 136,000 in October, after the jump in September
- To 1.22 million openings
- From 4 years ago: +23%
- 3MMA: unchanged, at 1.27 million and up from the recent lows over the summer.
Retail trade, with 15.5 million employees, part of which has been under relentless pressure from ecommerce for years. Job openings are back to 2015 normal.
- Down by 102,000 in October.
- To 543,000 openings
- From 4 years ago: -36%
- 3MMA: -57,000 to 613,000 openings.
State & local government, mostly in Education. This is where the teacher shortages were and to some extent still are visible:
- Up a hair in October.
- To 811,000 openings
- From 4 years ago: +22%
- 3MMA: unchanged at 836,000 openings.
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Well, I guess they need more workers to burn faster through that pile of investor money and government stimulus.
I heard good one.
Many techies who work remotely(most time) have now started taking 2nd full time positions(with big pay typical $100k+ each)
then performing well for both companies and routinely going into company offices for meetings, etc.
some making $500k or more
IT here, yeah, it happens. Some even outsource their work to India or Pakistan.
Ex-coworker apparently was doing this. $500K/year. 2 full 1 part. Bought big house in MCOL can pay it down quick.
Didn’t set out to, got new job offer and just found that he could work both and keep them satisfied.
Have to be careful, there is an Equifax service that has your pay stub history and good chance employers can see them.
The pretend to work from home thing is still alive and well, which is why the roads, stores and restaurants are packed all day, everyday. These people are skiing, biking, hiking, shopping and eating out instead of working.
The stock bubble is back to near all-time highs. Crypto is now back doing some insane moonshot. We are in a massive everything bubble which is raging uncontrolled.
The amount of speculation is disgusting. The Fed screwed it up big time.
The FED is intentionally blowing asset bubbles. After the first housing crash of 2008, they and all their political toadies and bureaucrat buddies, for instance Larry Summers, were yammering on about how the FED should blow yet another housing bubble.
All of these people currently in control are like a cancer upon society. They took a once-great system and turned it upside down and strip-mined the wealth from it, leaving a hollowed-out shell. If the world were fair and just, many of them would be jobless and/or in prison.
For what it’s worth, if I were employing a software engineer who was doing 2 or 3 hours of real focused work in a typical day, I’d be happy with this output. Even if he was spending all of the rest of the time out skiing and brunching.
If he were working for another employer, that would be concerning, because it’s not possible do do 2-or-3 hours twice in a typical day, if you’re doing a good job.
But I’m skeptical that there’s a lot of this, because Wolf has posted graphs of “people working multiple jobs” and this kind of remote-work double-dipping would show up there. And there hasn’t been a clear indication of this. I think it’s probably just a couple Instagram influencers and liars.
HMMM…not sure if that’s correct. I know a lot of people that are much more productive working at home than many that show up in the office before the bell every day. Any skilled manager will always eventually find out if a personb’s production is not up to par, and the micro-manager that treats every home based employee like he/her is getting away with something or vacationing most of the time, will insult and eventually lose the top shelf employees that are steadfast in their work and never even cross their minds or considered anything other than churning & burning and move up in the organization
Mr Richter, I know your are not in the economic forecasting business but I wonder what someone like you who studies all facets of the economy thinks we are heading in the next year, 5 years, etc…Do you think we will just keep churning along with the stock market reaching ever higher or are we heading for any kind of lets say reckoning? If you do think the American economy will struggle at some point what do you think the main reasons will be?
He’s not going to reply. He doesn’t make predictions.
Unless they are about automated driverless cars bringing him delicious food with 12 kinds of different mustard.
;) jk
Yea it was worth a shot. I would love to have 20 minutes with Mr. Richter to get his educated opinion on a bunch of stuff. A raffle to get some video face time would be a great way to raise money for this site.
There was a get together in San Francisco before pundemic. I brought two cases of Stella. Wolf was giving speech standing on a chair. Sime questions about gold I think. Wasn’t listening. Some good looking ladies showed up, surprisingly. I walked one to a bus stop later (a nurse from Oakland, got her an Uber).
If you haven’t figured this out yet on your own then you haven’t been paying attention very long. I’ll ask you a question: Why do we consistently need to QE and lower rates whenever the stock market drops a tad? You remember that happening the prior portion of your life until 2008? I’ll give you a hint, Chapter 11.
I’ll give my company status.
– last week a co-worker was let go. He had been working remotely from Arizona. He would work 1 week a month at our facility in So. Cal., the rest of the month he worked from home in AZ.
He is about 62 years old and has been with the company for almost 13 years. He is a mechanical designer.
– last week a software engineer announced his retirement. He is about 60 years old. He specialized in android and iphone application programming for our IOT product.
– two weeks ago a materials engineer (corrosion expert) left the company for another job. He got a good pay increase and a shorter commute. He is 57 years old. I have not heard anything about a replacement yet.
– There are two guys that are very close to retiring (I would think) one of them is 70+, the other guy is about 69. One of them is an EE (but does strictly coding), the other has a PHD in Physics (he does EE stuff).
I sense there is a cost cutting agenda going on right now. Nothing official, but I get a feeling. Upper level managers who have not been coming into the office… are back in the office again. Their doors have been closed most of the time. (I could be wrong, and often am regarding these feelings)
This is a manufacturing facility.
How many total employees does your company have?
about 11,000 globally
about 700 at my facility
(about 20-25 are engineering jobs, the rest are manufacturing personnel).
I work for a smaller contractor in commercial construction in Canada, the project I’m currently on is decent size by our standards and the GC suoervisor running it told me and my partner that the job market “isn’t looking good”, he cited a layoff at his company and some larger layoff announcements in telecom (which is completely unrelated to us).. meanwhile, this project has already fallen 6MO behind (from a 14MO timeline) largely due in part to the GC not having enough workers, his entire cladding crew left for higher pay, rebar guy left for higher pay..
Point is, sometimes we read into things what we want or what we fear rather than what is, especially when it involves our livelihoods. I do the same, our company has been losing workers at a faster pace than they’ve hired, I figured it was cost cutting and hoping for a recession when it’s easier to pick up cheaper labour, but recently boss has been asking anyone and everyone if they know someone that could come work for us 😂, there’s way more work coming up and we can barely handle the workload as is, we’ve had to sub certain jobs out because we are so short staffed. Seems like nobody wants to do this work for what it pays at the moment.
Us baby boomers got screwed over by management,and we have let our kids know it .Whats really needed is a reset of management = less pay to a labor correction more pay .
Don’t go there. You also gave us Pelosi, Trump, Biden, McConnell… and the rest of the entire geriatric guard. Who, seems only interested in protecting the wealth of their generation.
All Good Here Mate,
This is the kind of BS that kills me. The people on your list — with exception of Trump who was born in 1946, right at the edge of Silent Generation and Boomers — are deep into the Silent Generation that boomers had to put up with all their lives.
Is yours one of the companies that is contributing to the manufacturing construction boom or not?
The answer may give clarity to your suspicions.
Anybody thinking about the next decade and economic constraints should watch the 60 minutes piece regarding quantum computing that was just on TV. I believe it’s on YouTube.
Everything is going to change. I guess Cheney was correct…..deficits don’t matter.
I saw that, pretty interesting.
Google, what is quantum computing used for. You won’t find a single thing. Honest experts are calling them prototypes, or lab experiments. Saying that it will be big in the next decade, or ever, is pure guesswork.
@Harrold,
In 1947 when the transistor was being invented, most people did not know what a transistor was going to be used for. If you would have asked my dad back in 1947, he would have told you that the transistor would replace vacuum tubes… and that’s probably it. Transistors became the building blocks of integrated circuits. Simple circuits at first and then very dense packed sophisticated circuits that we have today.
Whole industries were created after the invention of the XSTR, but it does take time.
So, I’m guessing that quantum computing will have a huge impact. We just don’t know yet.
Its always like that with new technology.
When cell phones first came about, I am sure most people thought “now I can make phone calls when not at home or the office”. And here we are 40 years later reading and posting comments on Wolfstreet from a phone!
In 20 years the transistor went from lab experiment to widely used discrete component to integrated circuits to the first microprocessors. In 15 years, quantum computing has gone from lab experiment to … more lab experiments. IMHO, quantum computing is the Bitcoin of the technology world: a weird idea with no practical application but will be a rich source of PhD theses.
There are ten teams and twenty cars in Formula One. Teams use Computational Fluid Dynamics (CFD) to get every last hundredth of a second faster per lap using this technology. And they use a hell of a lot of computational power to do so.
“It is a technology used to solve complex aerodynamic problems using advanced mathematics, supercomputers, and the application of physics laws.”
Which is all well and good. But there’s one man, for now, who is better than these CFDs. His car is the fastest. Plus, and his driver is the best.
“I can picture it. I can picture things well in my mind.” His dad’s interest was math and engineering. His mother’s side of the family was “very artistic.”
“That’s ultimately what you need — that combination of the creative, artistic side, measured with an engineering discipline and analytical side.”
The man is Adrian Newey. On Boxing Day, he will be 65 years old.
Quantum computers in the right hands will make many improvements, no doubt. Will they transform technology and life in general? That’s a good question.
When the smart computers tell us some hard truths, like that a lot of sports are “influenced” to enrich others, will you believe these smart computers? Or just blow them off like one does on certain forums such as this?
Hehe
Fluid dynamics! lol
Sports, in general, is a business.
On 23 January 2017, Liberty Media Group acquired the Formula One Group in a “transaction value” of $4.4 billion.
Quantum computing and AI will change everything in the next decade.
There will be a lot of hype and some breakthroughs during the next decade for sure, but I suspect it will be 2-3 decades before either QC or AI gets to the level of being able to “change everything”.
Major advancement in either could speed up the other tremendously so there’s a possibility of that happening within a decade but I don’t see that as the most likely scenario.
Bruce Schneier wrote an article on Monday warning of the coming use of AI in mass spying.
AI will be able to review audio tapes, surveillance video, email, text messages, bank transactions, etc. Things that would take a human agent days and weeks to do for each person of interest.
AI can scale to allow this to be done for everyone is a city or state or eventually, the entire country.
Soon the police will not need to due any investigations, the AI will simply tell them who to arrest everyday. Add in an AI judge and jury, and the criminal justice system would become very quick and efficient.
Big Tech has been doing this for years. They know everything about you, from who you sleep with to what you have for dinner. That’s what Big Tech is all about.
Interesting article today in NYT about AI.
So about a year ago there was this race for AI. The lawyers at all the companies were fast tracking it, safety be damned.
Basically what it all boils down to is who gets to be the dominant tech player in AI. Who is the VHS of AI. The tech companies could give 2 shi*s about how it works, what it does… etc etc. just who’s using it instead of Google search.
So yeah obviously Google freaked out a lot.
It’s a ton of hype and 99% who wants all us pions using their product. And just FYI Nvidia sells them all chips so that’s a solid play, lol.
Change everything in what way? We’ll become more isolated from each other? More people will be on medication? Spend more time staring at screens?
Quantum compute all you want.. us HVAC, Electrical, Plumbing, Mechanical, Welders, Repair Guys, Troubleshooters, Concrete guys, etc. Will always have work…that stuff never changes…
Until it does.. I honestly don’t expect it very soon, but there’s already some companies 3d printing concrete foundations and walls. In Germany few years ago I saw this prototype “Baubot”, basically builds from CAD drawings. Ofcourse it’s all in it’s infancy and I don’t feel like an endangered species at all, self driving trucks were supposed to be replacing all the drivers by now, that will happen but the timelines seem to always be a bit further out than people prophesize. Still, “never” is a very very long time, there’s no reason even our trades jobs can’t be automated when the tech gets there.
Those CAD companies “printing” houses have been around for 20 years.
I actually watch a show filmed in the UK where a dude building a beach house ordered the frames all CADed out in 2005. Worked out in the end.
Even with that option people turned to other more traditional builders prob 95% of the time.
Look for more pre fab and tilt up. Maybe 3D making components for and at a pre fab factory setting, but not on a job site. Think weather, theft, vandalism, and screwups meeting high tech and finicky components…… Last week I saw a pre fab apartment building going up, but it was just stick framed wall panels set in place with a crane. Of course carpenters do the assembly and ensure it all fits together.
The above comments made me smile because I thought back to the 70s hype. I remember ‘experts’ pontificating about our increased leisure time and what folks would do for fulfillment now that they don’t have to work so much? There were even uni programs in ‘Recreation’. Fast forward to today, gig workers, Uber crapola, homeless encampments and housing unaffordability. The vaunted high tech and design can be offshored to foreign sweatshops, and looming AI will further wipe out office, design, and managerial work, at least so say the current articles.
And every time I back up my boat trailer I have to cycle through a goddamn screen menu and disable the automatic braking ‘driver assist’ feature to stop the lurching and slam stops. The GD default braking resets every time the truck is turned off and re-started, like say at a boat ramp? It just makes life oh so simpler. ha.
There will always be a need for health care workers, and trades to fix and repair no matter how and where things are built. New construction is tanking where I live, but my brother in law has years of work lined up doing niche renos. They charge out for big bucks, all word of mouth, and the customers are fixing and adding to new and old homes bought with legacy money made in fleeing from wherever and selling off their city homes to another generation. Current project is converting a barn into a home which any builder will tell you costs many times more than a tear down and new build. Well paid labour by the hour, until project is finished.
This can’t continue, imho. Note to self: plant more potatoes this year, can more salmon.
They build the data centers in NoVA rapidly with tilt up concrete walls that are brought in. Always wondered why you can’t do a house that way.
There are tip-up homes built in FL. My Ex-BIL lives in one.
Once those are the only jobs available, wages will go down dramatically.
I remember 60 Minutes reporting that electric generation from fusion would happen in 10 years. That was in the mid-1970s. I also vaguely remember their reporting that the earth’s ozone layer would be gone before the year 2000. And that the economic might of the USSR would overwhelm the U.S. because everyone knew that controlled planned economies provide more opportunities and higher standards of living than free market economies.
I don’t watch 60 Minutes anymore. They lost me. Like late night talk shows they got too political.
@Ed C,
You should watch the recent quantum computing episode of 60 minutes. I didn’t detect any kind of political agenda.
MSFT has signed a power agreement with Helion Energy who is working on what appears a very novel fusion reactor system. They’re working on something like their 4th prototype. If all goes well next year, they just may make their 2028 deadline to provide power to MSFT.
Their tech really looks like it’s probably going to work out a lot sooner than most other designs. They’re using helium 3, and their process for making energy actually produces the H3 they need. The other really cool part is their process creates the electricity directly. There’s no external process like converting steam to power that’s needed.
Do some searches on youtube. They might be on the verge on something earth shattering.
“Do some searches on youtube.”
LOL. The BS I run into on YouTube pollutes my brain.
Jobs market press said something different with another big drop in the 10 year and forecasts for pause for sure and drop early next year. Wolf may not agree but I think the 10 year drop in less than 2 months is mind blowing and left me flat footed for sure . Higher for longer if we continue on this path of labor balance and spending from us government up and away which is very inflationary. I hope not
Yields peaked right as central bankers said “the bond markets already did a lot of the tightening for us.”
The market giveth & the market taketh away. It was an idiotic thing to say.
Maybe the markets are asking for more rate hikes. Otherwise those bond auctions will look ugly
Market thinks the Fed is going to pivot when two people hit the unemployment line. It’s absolutely ridiculous. Job market is no where near anything that warrants a pivot. I’m furious about the 10 year going down though. The Fed needs to do a surprise rate hike to put wall street in its place since the market isn’t taking anything the Fed says seriously.
We all know a surprise hike will absolutely not happen. CPI report the day before will likely support a continued pause. What the Fed needs to do is not put any cuts in there dot plot for next year and push back against market moves
The Fed hasn’t been putting in cuts for next year, but Wall Street is acting as though they did. That’s my point. Wall Street won’t get it unless the Fed hikes.
Fed Up,
This is the result of a communications gap. The FOMC laid out clear criteria for raising rates in 2021/22, which they repeated meeting after meeting to underline their commitment to following through. The criteria were “a return to full employment & inflation above 2% target.” These metrics were 3.6% & +6.9% PCE Y/Y upon the first rate increase in March 2022 – they waited that long.
It’s not clear why they refuse to disclose similar criteria on the downside. Something like “4 consecutive months of PCE inflation consistent with +2% Y/Y, (ie <0.2% M/M)” would go a long way to getting markets on the same page. Policymakers understandably want to be retain some flexibility but they didn’t mind doing it in the other direction.
I’m over a week behind reading financial news but I did see a snippet about this. Boy are you going to be disappointed.
The Fed would rather piss in their pants than do a surprise rate hike. Greenspan conditioning. If he is still around it would not be a bad idea to take him to the back of the woodshed for the damage he has done to capitalism.
All of them to the wood shed or tar and feather or draw and quarter, your choice, especially Bernanke.
I don’t understand the modern FOMC’s obsession with “not wanting to surprise markets” (and thus needing to precommit policy months in advance, in the face of potentially volatile economic data they’re basing their judgments on.)
Would a 0.25% difference against market expectations in either direction really cause the economy to implode? I think not.
The revolving door between the FOMC & Wall Street is a huge problem, though. They can’t upset their future employers.
Sounds like great news overall for the average investor
I love your optimism
Forget about all the people who say that things are going bad. I’m listening to you, and you just made my day!
When you have something bad to say all of the content creators on YouTube will readily quote you but when you give us positive and optimistic news, then they won’t touch you with a 10 foot pole.
How is it great news for the average investor? Current stock prices are only justifiable if we return to ZIRP.
The average investor needs BAD news that will result in a pivot.
Cutting short-term rates will not help unless long-term rates go down.
With $1 trillion a year QT, and $2 trillion a year issuance, are long-term rates likely to go down?
They have gone down a lot in the past month based on the “hope” of a Fed pivot.
I agree. Positive news in general. I do see things similar to the weather. Any more than short range forecast it is guesswork. The fed policy won’t shift rapidly but as Covid or other significant events have taught that can shift quickly. Diversification is like dressing in layers. Be ready for anything.
Isn’t the labor market always tight at the top?
Tons of job openings for anyone who wants them. Consumers continuing to spend on anything at any price. No recession in sight despite wall street unabashedly whining for more free money.
Internet commenters seem to self select for pessimism. I have no idea why. Perhaps they are mostly the unemployed or retired with lots of time on their hands, and vivid imaginations.
I tend to think they are retired from the workforce and tend towards negativism.
Focusing on the negative doesn’t get you money or happiness.
As long as employment holds up I am a bull (except for Dec of 21 with inflation at 9% and then I was a BIG BEAR).
You still think the market looks at fundamentals lol. The market wants job losses. Bad news is good news thanks to that piece of filth, Bernanke, and has been since his reign.
Market is firmly detached from the fundamentals and fundamentals don’t matter any more in this new era of centralized economy.
I have been long market since March-2023 after observing the FED’s reaction to so called banking crisis.
Market is in lala land right now waiting for FED pivot which I think would come sooner than later.
If the economy is really this hot as purported by WR articles here and on top of this, financial conditions have loosened so so much. Then in this case, FED must do surprise hike in DEC but I am sure FED won’t do anythng of this sort thus showing its true color.
‘Market is in lala land right now waiting for FED pivot which I think would come sooner than later.’
Looks like a contradiction. If the pivot is ‘likely to come sooner’, the market is not in ‘lala land, it agrees with you that the pivot is coming.
I am pretty sure the pivot is NOT coming sooner for the same reason. The market being in ‘la la land’, which it is, amounts to blowing off the Fed and challenging its credibility.
There is a huge mismatch between demand and supply in the labor market. The demand is mostly blue collar jobs, but most available workers are white collar. A recession won’t fix that. And this is before AI eliminates 50% of the knowledge jobs. Better get that UBI started soon.
White collar is a broad category but haven’t seen any slowdown with software engineers. We often need to interview dozens and look through 100s of resumes to find somebody qualified. AI will slowly take some jobs but that has occurred at different times will different names. It was humorous to watch the latest South Park on paramount where white collar workers were unemployed in front of Home Depot and experienced handymen were setting their rates and flying expensive jets. Wouldn’t be a bad thing if we valued vocational equal to that of the 4 year degree.
Glen,
Why do you need to look at 100’s of resumes to find one good programmer? Seems ridiculous to me.
Many moons ago my boss dumped a Basic program on my desk and told me to fix it. I told him I didn’t know Basic. He told me to borrow a Basic manual from somebody and learn it. He was right. Problem solved and program fixed, that day. Any professional should be able to adapt.
UBI…no.
Just look at your statement. UBI is a handout to automation/AI companies.
If I were a company that made robotics to replace workers, I’d love for the government to give workers money to sit at home so that they don’t compete with my product. I may even lobby for it
Well I think that is good news for America, a society that prides itself as a democratic capitalist leaning society where one is only doing well when our neighbor has enough. The ethos of those soldiers, really, who designed America.
In the background is this creepy, Federal Reserve, who apparently believes that the way too combat QE inflation is too suppress the catch up earning power of the society that fuels the American, economic furnace.
A tool of the silent aristocracy that rules this, temporarily, somnolent inequality.
The ratio of job openings to unemployed persons is still extremely high, at 1.34. That is enormous compared to pre-pandemic history, going back decades.
This ratio should be looked at with overall demographics and labor participation rates. It’s interesting but not meaningful in isolation. There are very large swings in these numbers. Total employment and wage growth are much more indicative of general conditions–I think these are more meaningful than the unemployment rate.
It’s inflationary. Less workers means higher wages, currently at 4.8% growth, annualized. Demographics point to the problem getting worse in the future, not better.
I find it somewhat interesting that the shape of the charts for Quits and Job Openings are similar while Quits have fallen back down to approximately the pre-pandemic high and Job Openings are still significantly higher than the pre-pandemic peak. I’m not exactly sure what to make of that but it’s interesting.
The squiggles will drive you mad even when your trying not to pay attention to them. Look away from Saranon, lest you be captured and begin to form an estimate of just where the value may be at some future date.
Your growing certainty is accompanied by a sense of bravado that instigates a notion that you could earn extra cash betting on this certain outcome.
And just like that, you have acquired another vice that will, eventually, need to be expunged.
The current economic inequality, created by big businesses agreement with the labor monopsonist, the Chinese Premier, chief honcho of the Chinese Communist Party. The worst capitalists allowed to develop communist labor to compete against the domestic labor force in the same marketplace at the same price. Better than slavery because when they collapsed it was a Chinese problem.
Not Boardwally Corp, the quintessential depression era corporation, who sponsored the transfer of American manufacturing to China and accomplished an economic reconstruction of American society that favored the wealthy in preference to the foundation of our society.
Markets are now pricing a 98% chance of a rate reduction by the June 2024 meeting.
This is before even one month of negative nonfarm payrolls job growth.
To which I say so what. If the Federal Reserve is better than feckless then that would be an improvement.
The failure of Fed does not seem to be random as much as it seems is more likely, the Fed is a tool of the aristocracy.
The Fed still controls all of the so called markets. The unrelenting bid for the past 15+ years was the Fed cash being put to work in the asset value markets. And it still is.
We have felt the labor churn at work. maybe 60%-70% of the factory turned over in two years. So many new faces I can’t keep up. All the old reliable guys kept right at it.
Just off the top of mt head since 2020…One assembler left to sell cars. One went to an auto parts shop. One assembler left to drive for Uber eats (not a good idea around here, if anywhere). One welder went to a Verizon store to sell phones. Some welders got burned out and asked to move to CNC machinery or they might leave. Two guys got ill and passed away in their late 50’s. One long tenured guy got arthritis so bad he had to retire due to disability. A few were lost to other local factories over a dollar or two, or a shorter commute. A few had competing offers and we matched them. A few we let leave. Some left for family reasons. Lots got fired for attendance or laziness. One went to a parts counter with a farm equipment dealer…etc etc.
Overall we have raised the shop head count by half from 2019 by recruiting and adjusting wages upward but our usual low turnover shot up big time during all this recent labor churn. No single reason stands out other than people feeling generally restless and compelled to shop around their labor offering with different buyers.
I think labor turnover is a major contributing factor to a general sense of “everything being messed up” right now. Our supervisors and quality control guys have had their hands full training new folks and stopping junk from getting out the door. If your average tenure drops from ten years to three, you’re going to see a change in quality of output for a bit while people get some experience.
Still trying to carefully hire for QC, weld, and engineering.
Well, I would say that the quality of work always trumps bad management decisions and actually supporting the non productive burden of white collar incompetence.
A story about my life that has stayed with me for the past 50+ years is my senior year in high school meeting with the career guidance coach. This is in the late 60s with the war in Vietnam raging, he asked me if I had ever considered a career in the USMC.
Random guy 62,
I really appreciate your sharing the company’s staffing issues. That’s exactly what churn does. Brings back vivid memories too.
Exact same thing is happening at my job. Our division had about 7-8 drivers. Unlike most driving jobs we work like dogs doing manual labor. Think food service like Sysco but harder.
1 guy quit to go to a linehaul job. Another retired. Another one is retiring in 4 months. Another one retired due to losing his medical card. I’m quitting because of the work load shoved onto me.
Half the staff will be gone as the company has spent the past year expanding aggressively. We used to work 40 hour weeks and lay around for a day or two healing up to be able to walk again for the next week. Then we all started running 60+ hours to try to keep up with the expansions. Company started selling equipment, refusing to fix anything, using elogs to micromanage drivers, determining when and where we take lunch breaks as a punitive measure for not running overweight or over hours or tagging out trucks with dot violations.
Now morale is basically dead and management won’t communicate with anyone and just shrug when asked anything. But they’ll blame you when you take things into your own hands and make a decision they refuse to. It’s turned into a black hole for everyone. Customers mad at the drivers, corporate busting everyone’s balls, middle (local) management being passive aggressive and just throwing in the towel, and disgruntled drivers. Meanwhile all the equipment and facilities go down the drain.
But our division held out the longest. This happened to every other division we have West of the Mississippi. Endless churn as new employees join up, get tossed into the meat grinder without any life lines, get run into the ground, and told by management that, “Oh well, it’s just the job. Try being a man sometime and you’ll make it.” While corporate comes in and tells the drivers and laborers they’re all going to get fired if they don’t work harder and start working 80 hours a week instead of 70.
Luckily I’ve just got 3 more weeks. Think I’m going to tell trucking as a whole to get bent. Might jump over into the construction world. I know electrical decently well and I wouldn’t be working near as hard. Probably get paid more too and be home every night. Grass is always greener and all.
If you have your own business and work like a dog, you will make tons of money. This thought has probably occurred to a lot of blue collar workers – why am I working my ass off to make rich guys even richer?
If even one or two guys do this, they’ll have so much business they can’t keep up. Then they’ll call their buddies back at their old company – would you be interested?
TGuy
Your comment sure brought back memories. I remember flogging around the BC Coast servicing logging camps and remote villages. One day a dispatcher booked me for non stop, all bloody day with no stops or breaks. It just took a quick glance at the booking sheet to see how it would unfold. Eff it, I pulled into my favourite camp about 100 miles away and had a wonderful lunch, (gourmet chef….believe it or not, ran the ‘cookhouse’) so it was the goto stop for all of us. They freaked out at base because they couldn’t do a damn thing about it. I just said the fog came down and visibility dropped. And I was the ops boss! When workers feel screwed that is what happens. The company now runs on life support with the owner and one part timer doing the flying. Everyone else moved on. I remember reading about a pilot in Denver stuck in a lineup for takeoff. He couldn’t take it anymore, shut down and hit the emergency exit and just walked off the runway.
Good luck. I am sure you will have some mixed feelings but lots of relief. Quitting can be scary but a good worker seems to always land right side up.
@Trucker Guy good luck finding something you like better. I recently paid an electrician $20K to replace the “Zinsco” breaker panels in a Sacramento Area 20U apartment. At a Christmas party last week I was talking to a guy that said he recently paid just over $2K/unit to replace the old breakers in an SF apartment (my guy was doing two panels a day making good money, double that is really good money). I have noticed an increasing amount of “churn” in the trades as less and less sole proprietors seem to be able to self manage a business and soon go back to working for someone else. We recently had a long term tenant move out of a rental and my High School son and I replaced every “ivory” plug and switch with new “white” ones since I could not find anyone that was interested in doing it at a reasonable price (I had a guy tell me he wanted $40 for each plug and switch – my son and I were replacing about 5 an hour – and probably doing a better job than most “pros” since my Dad taught me to be a little OCD and make perfect “fishhooks” before connecting every wire “doing it right the first time”).
Come over to Omaha ne local 22 electrical union . Begging for workers contact bob sidzek
Lol. You must not be planning to become a union electrician doing commercial or industrial work. I’m not laughing at you. I’m laughing at the frustration of poor management, and you will find all of what you described, if not more, on commercial and industrial construction sites. When you find out what residential construction offers your life, you may wish you were on those commercial and industrial jobsites getting ran through by the IBEW instead of a poorly managed small shop. Any profession tied to construction is not nice. I would never tell my kids to go into construction unless they really had an excessive motivation for that life and work and lacked other potential paths. Civil Engineering chews people up and spits them out. Construction Management chews people up and spits them out. Skilled Trades work chews people up and spits them out, as Journeyman and Foreman. Everything tied to construction always needs to be done two days ago and the bidding process has slid the work over time into consistently unrealistic deadlines that means nothing is ever enough and you’re always being asked to do more (overtime). These companies think they can buy your life as long as they pay overtime, and if you go into construction you will surround yourself with people who know little of life besides selling their time in exchange for money. In other words, if you like to get paid by the hour, work hard, be outside in weather that’s not usually ideal, commute long distances, work with people with at least average substance abuse and personal life problems, shit in a plastic boxes in temperatures that vary by 140 degrees fahrenheit, deal with nepotism, and do good quality work, i’d say go for it. I actually like construction. Unions did incredible work to make the industry safe. The corporate world (often in relation to insurance) has made the gains from safety also turn into major burdens for things that should not be. Tell your kids to become accountants, finance majors, nurses, car salesmen, bartenders, waiters, landscaping business owners, etc. Honest hard work does not get you anywhere because of inflation. It may pay good enough to keep you afloat and provide what you need, which is usually enough for most people, but I can tell you that it is very easy to increase your pay by about 30% if you are willing to work 2 or 3 times as hard. Does that sound smart?
Same for us. Essentially zero attrition for 15 years. Unbelievably excellent safety and reliability record. Profits through the roof – CEO bragged about printing money.
Company worked as a well oiled machine and continuously expanded production. Won many industry manufacturing and safety awards.
Then COViD hit and we went through a restructuring with some layoffs. Flood gates opened.
Since then people leaving continuously – slow steady drip. Now we have the old guard left (who are starting to retire) with a lot of young inexperienced folks. Reliability and safety record has taken a big hit – trying to keep the old culture alive.
The vibe of the place has certainly changed almost overnight.
Historically, inappropriate money printing is the slippery slope that ultimately led to the downfall of the most important Western empire which standardization of the concept of citizens rights was the foundation of the Roman empire which existed for at least a millennium.
I suppose if you only officially count Roman citizens versus significant slave populations there is some truth to that although like the US they had there large land owners which here is those who own capital. Corruption was one of the main reasons for the downfall of the Empire which led to internal civil wars and then invasion of Germanic tribes. Certainly inflation would have been part of that given the circumstances but haven’t seen money creation as a leading cause of the decline. The US does have an odd fascination with the Roman Empire although there are certainly significant parallels.
Inflation happened during roman times.
they used silver coins and in the late days the silver content went down to almost zero.
Source of fascination with Rome…
1) Previous Republic got pissed away,
2) Empire covered pretty damn large geo area for era,
3) Fairly decent records available, allowing discussion,
4) Empire died through Imperial over-reach and
5) Stink/reality of self-dealing corruption/incompetence at the top.
Americans look to Rome because they see a worrisome antecedent. There might be better/more on point models…but because they were smaller, they are lesser known.
The vast majority of Americans never wanted a pseudo-Empire, but their “leadership” bumbled into it, mis-managed it, and is in the process of ruinously disintegrating it.
Looks to me like a lot of these employment metrics are finally returning to trendline after the past two years of the job market being completely detached from the fundamentals. A healthy “normalization” of sorts whereby supply and demand in the labor market is becoming more balanced.
I imagine salary increases will continue to moderate as well as the number of industries with vast worker shortages steadily declines. In theory, this should help relieve some of the wage-side inflation pressure we’ve been seeing. The days of massive salary increases will soon be in the rearview mirror.
Will be interesting to see. The recent strikes that were resolved was a mixed bag although giving significant pay gains didn’t in some cases get back to pensions or even health care. Many were front loaded as well. The big 3 are already likely in trouble with Teslas recent price decreases and not clear what things will look like in 2028 when it comes time again. Certainly a lot of solid gains but nothing seems guaranteed. Not providing full rebates for batteries or minerals from certain countries will stimulate jobs here but not clear it will be best for the consumer or tax payers but time will tell on that one. I’m not confident American car companies can survive without protection outside of Tesla without major changes and massive investment. Definitely a different labor world than my dad had retiring with PacBell and I will likely hit a solid window but not sure what my teenage son will face.
The well being of labor, whose paycheck supports the very fabric of our society, is being portrayed as the cause of inflation.
The increase in wages and benefits is actually what a healthy democratic capitalist society would hope for.
The extreme concentration of wealth that currently exists in America is the farthest overthrow of Jefferson’s Declaration of Independence, throwing off the English wealth dominating commerce in the colonies.
I think you have an idolized view of capitalism and the founding fathers. Writing that all men are created equal and not freeing slaves is hypocrisy at best. Capitalism will always concentrate wealth as the goal is to get market share and stamp out competition. Companies are providing additional pay and other compensation simply to compete to get the labor they need. When that no longer is necessary they will cut back. Not because they are evil but because the system requires it to survive. The early Americas was also early stage capitalism as one way to think of it. Many businesses and competing amongst themselves and relatively limited control of government compared to today. At this point companies own the political establishment essentially although there is a subtle tug between various forms of economic liberalism but it is almost identical. At least for now workers have earned a little more but nothing is guaranteed and of course running record deficits in good times is not a positive sign for the inevitable downturn that periodically will occur. For the most vulnerable in society that will just take bad to worse.
Glen,
It wasn’t hypocrisy. Slavery was allowed under British rule and many states abolished it after independence. The 3/5 clause was just to get the few southern states to sign the Constitution. There was a tacit agreement not to make slavery an issue for the first 20 years, but Benjamin Franklin and many, many others cried for abolition right after the Constitution was signed.
We had a war over slavery, too. That should not be forgotten.
There is much more, of course, if you want to read more history.
My point was about Jefferson but important to forget the war initially want about slavery but reunification. Lincoln was not an abolitionist and while against slavery in principle still considered black people inferior which is well documented. Ultimately eliminating slavery became important as the South was winning and of course keeping Europe out of the war was important. That said, it still was a bunch of white, wealthy land owners that defined the nation which didn’t provide equal rights and to this day it still doesn’t exist, although I will give you that things such as the civil war, women being able to vote, civil right movements and voting rights have moved the country forward in some respects it has gone backwards in others. I get people want to get him behind a revisionist version of history as many states are doing but best to just objectively view the facts.
This economy is like a jigsaw puzzle. It was a fragmented mess in the beginning, but as more data comes in, we start to see a picture. That picture is of Jay Powell safely landing a Boeing 747. There’s no doubt about it — we are witnessing the elusive soft landing.
With a resilient economy and rate cuts on the horizon (mid-cycle adjustment), 2024 should be smooth sailing for investors. $AAPL to hit 4 trillion? Why the heck not?
Obviously, normal PE ratio.
Something that puzzles me is that despite largely positive net job creation (around 5.9M hires and 1.6M job losses), the unemployment rate is still slowly trending higher, it’s a hair above the pre-pandemic level.
Is it a K shape thing with many people working 2-3 jobs and many others scrambling to find even one job? Sounds far fetched.
Or the number of people able and willing to work is growing even faster than the net job creation? I thought the population aging was causing a decline of potential workers, so that seems unlikely.
So I don’t have any explanation :-)
The explanation to the slowly rising (and still very low) unemployment rate is the influx of people into the labor force — more people available to work including from immigration, folks returning to the labor force, and waves of young people coming in for the first time — while employment rose at a good clip but less fast than the influx of people into the labor force. So the unemployment rate (the number of people looking for a job divided by the number of people in the labor force) rises.
Here is the labor force:
Wow, that’s an impressive influx! Thank you Wolf for the explanation.
I have a small carpet,rug,couch cleaning business.I can not find not a single,qualified helper for 50$ an hour cash(it is a restoration job).The business is DOWN 30% after covid,I was able to raise the fair by 25% only.But I am o.k working 7-8 hours a week,working myself(150$ h).Being an active swing trader for 25 years,I am o.k.All my IRA acc is 99% GBTC since last December. Being a part time NYFW vudeographer gives me no money at all,just a hobby.
$50/hr cash for furniture restoration? I am deadass in the wrong line of work (healthcare).
Is that a steady 50 bucks, 40 hours a week? Or is it for ad hoc, piecemeal work?
Depending on the sofa, at 150 an hour, you might as well reupholster the damn’d thing…
Fake AI and associated bubbles (companies claiming to have AI but it’s really a Perl script) will create some jobs, but then crash in a few years when it all turns out to be just another fraud inspiring more episodes of “American Greed.”
Go long CNBC reporters?
Had a meeting with a site electrical utility type contractor (they do the larger electric and telecom duct banks for large projects.
He told us that Charlotte has really dried up, but Raleigh, NC is booming. They don’t do MFR, so that isn’t in the mix.
I know in Raleigh, we have combination of biotech production (sort of like a factory), manufacturing, some warehousing, government and a host of large late cycle projects going on. These types of projects can keep an area going for 2 years past the sell date of a business cycle. I think a lot of people are a bit nervous. They remember how everyone around here breezed through 2008-2010 before the bottom dropped out.
This is sort of my view too. I see LOTs of late cycle construction. Even a small manufacturing facility or apartment complex can require a couple years in the planning & permitting phases before a shovel hits the ground. Many of the projects being built now were being planned pre-pandemic or early on in the pandemic, my own employer included. Tons of cranes over at Intel driven by the chips act, so government juicing is definitely having an impact on areas dependant on gov spending. I’m not seeing new projects around here though. It could be a lul in activity held-over from mid-2020 planning delays, or it could be that existing projects will keep the area mostly afloat through 2024 maybe into 2025 before a drop. Or maybe this really is a soft landing and the recent spike in construction spending will keep the economy rolling for years to come. My intuition tells me there has to be a big dropoff coming, but this new economy just keeps throwing curveballs. I’ve been wrong so far.
The big stuff keeps rolling for awhile. But you’ll see well over 20 GCs bidding something like a fire station.
Last time around, we had big contractors from FL, OH, etc. coming in to bid military contracts. You ask why they would come this far to be one of 20+ bidders, and they say “at least you have something to bid on”.
In theory, when money is simply printed, the economy keeps going but prices move up to a new equilibrium, and that’s exactly what we’ve seen.
After $5T was printed in 2020, the inflationary component of GDP moved up by $5T in two years. Prices already rose enough to absorb the extra money supply. This explains why inflation is falling back to trend.
After the Fed printed $5T, it should have been clear the resulting inflation wouldn’t be “transitory” until the full $5T liquidity was absorbed by higher prices. They should have started QT a lot sooner and with much more force.
But it’s too late to do anything about it now. Prices have already adjusted upward. Debts have been incurred based on those new price levels. Unless you want to purge those debts and face a recession, the new price levels are here to stay.
Forget the promises the Fed made about achieving 2% average inflation. The Fed is hoping people move on like before, with prices 20% to 25% higher and additional government debt of $15T.
Right, the 2% target is BS if the Fed is going to print and tolerate 6-9% every time there is an “emergency,” as defined by them.
This is exactly right and why “soft landing” really is just the massive money printing price level increase finally flattening out to a new level after a few years of painful inflation. Not landing back to where we were, but at a new higher price level. Had they removed the excess $5T already like they did when going up then “hard” landing back to price levels we were at…not happening. M2SL has been flat since April, but still higher than 2020 and based on pre-COVID trend will be to where we would have been in 1-2 years…
Yep. The Fed decided it was going to monetize the whole COVID expenditures.
I have very little reason to believe they won’t stop QT once inflation is at 2%, even if it’s still $3 trillion above the pre-balance sheet.
The aerospace industry, which is centered in Southern California, is booming. The two wars have caused many countries to increase their defense spending. This has resulted in many thousands of high paying jobs in SoCal.
These jobs are the reason SoCal residential real estate has survived higher interest rates.
Yes,
A couple of guys from my company went to AeroVironment. (Drones)
Another guy went to Lockheed Martin
I am not a gold bug but today when I saw 2040 I was shocked. All you Fed predictors: if you don’t think it watches the gold price…
The chances of a Fed hike just went up. Chance of a cut went down…I would think to near zero. unless the banks are in more trouble than we can guess. But the Fed can assist in ways other than a rate cut.
Gold was $2,150 a couple of days ago. You would have been really shocked if you had looked at it at just that moment.
Wow!
Anecdotal evidence:
Large company headquartered in So CA let go 5K people, 3K in CA in last 8 months.
Most of them high paying software engineers/EE.
I know a lot of them and they are having tough time finding job, been looking for last 6-8 months or so.
Wolf, with the BLS getting only a 30% response for their survey as compared to more than double that in years past, how much faith do you have in the numbers in the report?
1. They survey is still HUGE, something like 8,000 employers responded.
2. a lower response rate only means that the month-to-month data is “noisier,” meaning more ups and downs. It doesn’t change the trends. That’s why I use the three-month moving average and don’t make a big deal out of the month-to-month swings.
Maybe companies have given up listing jobs due to no workers to fill them.
This is not based on online job postings, but on a big survey of HR departments — how many people they have hired in the month, how many were fired, how many quit, how many open jobs they have, etc.
Something is wrong with SPX [1M]. Since late Nov NVDA, MSFT, META,
GOOGL…were down, dragging SPX with them, while the Dow, which
is not infected by the magnificent 7, popped up on Nov 30, closing at 35,950.90, above threshold, reaching adulthood, along with NDX.
SPX might get another chance.
SPX [1M]. There is a Lazer Oct 2011 low to Feb 2016 low/ parallel
from 2014 high. SPX is losing its grip.