Job openings and voluntary quits jumped by the most in over a year, layoffs and discharges plunged.
By Wolf Richter for WOLF STREET.
The underlying dynamics of the labor market bounced back in October, according to the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics today. The data continues to be muddled by the Boeing strike that lasted through October and ended in early November, and by three hurricanes – Francine in early September, Helene in late September through early October, and Milton in mid-October – whose heavy rains and flooding temporarily shut down work sites in a substantial part of the country.
As we saw a month ago, the Boeing strike and the hurricanes had substantially reduced payroll gains in October, as reported on November 1. The jobs report for November, to be released on Friday, will likely show a solid bounce-back from those weak gains.
But today’s JOLTS data is for October still, which is why the bounce during what was a rough October is particularly interesting, and speaks of a retightening labor market.
- Job openings spiked in October by the most since August 2023, after the drop in September, and are above where they’d been in July, and above the prepandemic record.
- Quits spiked by the most since May 2023, to the highest level since May 2024.
- Layoffs and discharges plunged by the most since April 2023, to the lowest since June.
- Hiring fell in October after the increases in the prior three months.
- The number of job openings per unemployed persons rose to the highest since June.
The Fed has already started backpedaling from the pace and depth of the rate cuts envisioned after its monster rate cut in September, which was triggered by what we now know was a false alarm about the labor market. And this data here will provide more reasons to continue backpedaling, and Powell will cite a few of the moves here at the FOMC’s post-meeting press conference on December 18.
Job openings spiked by 372,000 in October from September, seasonally adjusted, the biggest jump since August 2023, to 7.74 million, above where they’d been in July, above the prepandemic record (blue in the chart). This data is based on surveys of about 21,000 work sites, and not on job listings.
Not seasonally adjusted, job openings spiked by 928,000 to 8.17 million openings.
The massive churn of the labor force in 2021 and 2022 clearly has ended as fewer people are quitting, therefore leaving behind fewer job openings to re-fill, and fewer people to higher to re-fill those openings. But October was a sudden and big U-turn that points at increased demand for labor.
The three-month average, which irons out the month-to-month squiggles and includes revisions, ticked up to 7.66 million job openings, above the prepandemic highs in late 2018 and early 2019 (red):
The number of job openings per unemployed person – a metric of labor-market heat that Powell cites a lot – ticked up to 1.1 openings per unemployed person, the highest since June. This means that there are still slightly more job openings (7.74 million) than unemployed people looking for work (6.98 million).
The ratio has been roughly stable for five months, at a lower level than it had been during the hot labor market in late 2018 through February 2020. The sharp decline of this ratio until June was one of the reasons Powell cited specifically for the 50 basis-point cut; the metric was a sign that enough heat had come out of the labor market and that the Fed didn’t want it to cool further.
Voluntary quits spiked by 228,000 in October from September, the biggest jump since May 2023, to 3.33 million, the highest level of quits since May. The three-month average ticked up to 3.20 million.
The massive churn in the workforce during the pandemic, when workers jumped jobs and industries to improve their pay and working conditions, and to better match their skills and aspirations, had triggered the biggest pay increases in decades.
Fewer voluntary quits mean fewer newly open roles that have to be filled, so fewer job openings, and fewer hires to fill those openings. For employers, lower quits is good. It reduces the churn. Productivity rises when workers stay longer and learn the ropes. In addition, pay increases have moderated because employers no longer have to entice workers with aggressive pay packages to stay, or to come work for them.
But October’s surge in quits, if it is sustained, would be the first sign that workers are regaining confidence in the labor market, that more of them are getting hired away from their current job by more aggressive employers, and that the grass looks greener on the other side of the fence once again. These would be hallmarks of a re-heating labor market.
Layoffs and discharges dropped by 169,000 in October from September, the biggest drop since April 2023, to 1.63 million, the lowest level since June. The three-month average fell to 1.70 million.
Layoffs and involuntary discharges include people getting fired for cause. Getting fired is a standard feature in America, and it occurs a lot even during the best times. And currently, they’re still historically low.
Layoffs and discharges as percentage of nonfarm payrolls – which accounts for growing employment over the years – declined to 1.03%. The three-month average declined to 1.07%, both far below any time during the pre-pandemic years in the JOLTS data going back to 2001. It documents that employers are hanging on to their workers.
Hires dropped by 269,000 in October from September, seasonally adjusted, after three months in a row of increases, to 5.31 million.
Not seasonally adjusted, hires rose by 104,000 to 5.73 million.
The three-month average dipped to 5.44 million hires (red).
These workers were hired to fill roles left behind by workers who had quit or were discharged, and to fill newly created roles.
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Seems like we’re in for another wage-price spiral next year…
I hope you are wrong, but I wouldn’t bet on it.
well consider all those HIGH PRICED retirees going away at 10,000 per day or more
I’m working and looking at making bank in next couple years
to help pad and increase retirement income
my workers won’t have clue to what they had
Along with that, if it happens, will cause inflation to rise, I would imagine.
Still think they cut in Dec.
Let the ropes be cut on this tied down economy!
Hehe
I think they will, with a good chance of that being the last one, or maybe one more in January and then a pause.
That said, I would be pleasantly surprised with a hawkish hold.
May have to settle for a hawkish cut… If that even exists lol.
In the last few days, the CMR Fed watch has jumped from ~66% to almost 73% today. It will be interesting to see how it reacts as we finish up this week. I expect the Fed to cut once more and then go into a least a 2-month holding pattern, meaning they may not move until March. By then, we may be looking at them signaling we’re month-to-month with a potentially hawkish outlook that a 25-BP rate increase is necessary by spring.
I’d say “muddled” is starting to put it lightly.
How big an impact does Return to Office have? Or is it spread out across too long a time frame to have a significant effect? Some fraction of WFH workers will quit rather than move/commute, and some (smaller) fraction have been holding multiple WFH jobs, which might not be sustainable.
A lot of the WFH people with multiple full-time jobs already got fired from their multiple full-time jobs. It didn’t take companies years to figure this out. They went all out to eradicate those people. Many of them worked for Twitter, and when Musk fired 80% of Twitter’s workforce and shut down the offices, no one even noticed, LOL. A lot of the tech layoffs accomplished exactly that, get rid of deadwood. That has been going on for two years. Now the mantra is that if you work from home, you better perform measurably and adequately, or you’re on top of the next layoff list. So I don’t know how many of these WFH people with multiple full-time jobs are still left, or if that number is even big enough to matter amid the 160 million workers who actually work.
Mr. Wolf: “Even the mightiest Oak Tree is held up by its’ deadwood.” Author unknown.
“No one noticed”. Actually lots of people noticed:
– huge % of cuts were content moderation / customer service. They do not keep the site running, but they do keep it from deteriorating. Plenty of research shows the rise in extreme content etc. (Whether you think that’s a good or bad result is a matter of taste) but it was still noticed.
– Several outages and streaming problems. High odds the lost platform management staff would have solved these issues in advance
– External API project disbanded. This was a cost sink project to expand the ecosystem. also a matter of opinion whether this is good or bad business decision, but it was still noticed.
– massive shrink in ad revenue is caused in some part by the loss of experienced ad reps. It’s not 100% a “go woke” movement- some businesses do not like their skilled reps getting replaced with form letters.
The other thing to realize: large software companies inevitable put lots of resources into true R&D: so while “no one notices” when R&D is no longer performed, that means “no one notices” when they lose relevance via stagnation as the years progress.
Not to detract from the truth that many people were surely dead weight, but that’s true of people in every software company, for a couple of universal reasons.
So what? X is still there. It’s still working. Some people hate it, but what else is new. Content moderation on Twitter never worked properly anyway. I have tons of impersonators on Twitter that have been stealing my content, including my charts and the image of me, and then contacted people in order to sell them fraudulent stuff in my name, and Twitter never did anything about it. Twitter was staffed by thousands of overpaid lazy nincompoops doing all kinds of stupid projects, if they did anything at all. Musk should have fired 99% of them.
anyone remembers the botched launch of desantis campaign on twitter, lol.
Twitter was the place to get news from the ground, now bluesky has been an a lot earlier to get good info live from the Korea situation.
In the year after Musk took over revenue dropped from 4.4 billion to 3.4 billion. If the fired employees were making less than a billion, the co was better off with them.
Unrelated I guess but a question: why change the name to X? He had rights to the name Twitter, and the comments were tweets…?
Twitter has always been a silly name with a silly logo (a blue bird!).
The Fed’s chicken-out moves in 2023–working with the Treasury to bail out uninsured tech zillionaire depositors, and halting rate hikes–which sparked the market rallies that continue to this day, were triggered by a couple of shitty small banks failing.
The Fed’s unnecessary rate cuts–75 basis points in two meetings–were triggered by a false blip in labor data, later revised away.
Can you imagine how hard they’ll panic and juice the markets if something actually bad happens to trigger them?
fully agree. on one hand, rates are at 4.5% and the fed balance sheet is back down to where it was in like may of 2020 or something. but stocks are priced for zirp and continued printing.
the only thing that makes sense is that the markets believe that zirp and qe is just around the corner, so they’re “forward looking” to that.
Or inflation, inflation makes asset prices and earnings go up. They’re betting on rate cuts into a strong economy – which means it should take off. I think it goes up as long as the fed doesn’t scare anyone by raising rates, which it’s unlikely they’ll do.
right but not to the degree that the market has gone up. inflation does increase profits, but p/e ratios are at nosebleed levels.
for the market to be pricing in as much inflation as the stock market it, yields would have to be much higher in the bond market.
so one of those markets is wrong.
There’s a common conception that equities do well during inflationary periods — because earnings “keep up” with inflation.
Empirically, that’s not necessarily true.
Yes, revenues and operating costs tend to increase with inflation. But: (a) quantities sold tend to fall; and (b) interest expenses increase. On net, real earnings may fall.
For example, the S&P 500’s real ($ 2024) EPS was around: (a) $51 in 1965; (b) $45 in 1975; and (c) $42 in 1985.
The S&P 500’s real index ($ 2024) was around: (a) 925 in 1965; (b) 550 in 1975; and (c) 600 in 1985.
If you had simply rolled TBills from 1968 to 1980 — even before Volcker’s massive rate increase — you would have had a higher REAL return (+15%) compared to investing in the S&P 500, including dividends (-12%).
The bail out (take over) of SV Bank prevented most of the domestic startup landscape from going bust. It would have decimated payroll and those companies would have quickly dissolved under employee flight or had a slower death of huge loan burdens. Yes there are private startups that are actually profitable or close to it in high growth, but the investment landscape at that time was not friendly (and still isn’t great).
So there’s something nationally strategic to what the Fed did there; not just making big baby depositors happy again.
One thing is for sure, JPow and the Bailout Boys are not coming to save us. They will save the banks and their billionaire buddies, that’s for sure, and they will let inflation rip red hot all over again without a care in the world.
i don’t even think it ever really slowed down, regardless of what the cpi figures show.
Panic mega cut on first signs of trouble, but raise rates after you’re 12 months past obviously not transitory.
Inflation while rates are already high is a rock and a hard place, but seemingly that’s where the FRB is navigating the economy.
I just can’t figure out what to expect next.
I expect the play is just keep hammering short term gov debt.
Perhaps the Fed has learned from their past sins, and won’t be so quick to cut rates or do QE when the next crisis emerges.
Their actions in early 2023 (depositor bailout and rate hike pause triggered by the banking nanocrisis) and just recently (75 bps cuts triggered by a brief and, as it turned out, completely phantasmic labor loosening) certainly don’t give confidence that they’ve learned any lessons at all.
They didn’t stop hiking in 2023 when the SVB thing happened. They hiked in March, April, and July, the latter being the final hike.
No disagreement that the depositor bailout and recent rate cuts were unnecessary.
😂🤣😂🤣😂
Employers want an employee who hits the ground running, knows what to do without being told, and asks for peanuts in financial compensation, because he’s “reasonable.”
Employees want a stable job, a life-work balance, a good pay and a social arrangement at work where they get to be friends with the people they’re sharing the workplace with. They also want a non-asshole boss.
Both parties are being unrealistic, but because the boss controls the pay strings, his version of unreality tends to come closer to prevailing…
Are retirements considered voluntary quits?
No, they’re reported under “other separations.”
Ilan will hollow up DC. Gov workers are quitting, moving elsewhere.
Musk plans to fire workers via e-mails. WFH deadwood will be told to stay home and enjoy a permanent vacation.
I once took a course on how to fire and employee. One of the takeaways from that training is you have to make the employee feel good when he is getting fired. You have to tell him he needs to look at this as an opportunity to enhance his career in the marketplace. I wonder what Musk will put in his e-mail.
I’m interested to see if governments (CA state/ federal) will dramatically reduce job openings post-election and what impact that will be on the overall JOLTS data in the coming months, knowing there will need to be leaner and meaner governance coming soon!
Federal Government job openings accounted for only 1.4% of total job openings in October. So if half of those openings disappear, it will get lost in the regular monthly ups and downs and you won’t be able to tell the difference.
The flat US Treasury yield curve will revert to the normal upward slope someday, won’t it?
Some questions about this normalization are:
– Will it be the result of short duration yield decline, or long duration spike?
– When will it transpire?
– Will the normalization be technocratically orchestrated, or market driven?
(Aside: in your third paragraph after “Job openings spiked…” :
“Higher” should be “hire,” I think.)